Several weeks back, Michael Douglas appeared in a public service announcement shot by the FBI, in which he tells people that while they may have been taken by his character in Wall Street, that it’s important to remember that that was just a movie and in real life, insider trading is wrong and everyone must be vigilant to report any wrongdoing they observe on the job, especially after the shit we went through in ’08. Next up among actors who think roles they portrayed on the big screen contributed to the financial crisis is Richard Gere. Glamorizing being a corporate raider who made enough money to buy a hooker is his personal cross to bear. Read more »
Archive for March 2012
Was The Financial Crisis Caused By A Fictional Hooker-Loving Master Of The Universe? At Least One Guy Thinks MaybeBy Bess Levin
It’s finals time, folks! In undergrad, this meant camping out in the 24-hour library, not showering, ingesting solely caffeine and mozzarella sticks, sleeping less than four hours, arriving exam day in the ultimate defeatist attire (college hoodie and pajama pants). In business school, finals time means … hmm some light stretching, a hearty yaaaaaaaaawn from sleeping too well, award-winning hygiene, a variety of frosty beverages, and a manicure an hour before my toughest exam. I’d like to say it’s because I’m older, wiser, and better at time management, but (1) I’m a poor liar and (2) really, it’s because my many years have confirmed that looks matter more than grades.
In a similar spirit, my only other conclusions about life in business school follow. Here are few thoughts and theories I wish I had cleared up before starting, based on what prospective and newly admitted students seem to ask most often. Read more »
You Don’t Become The World’s Leading Hedge Fund Manager Without Learning To Delegate The Most Critical Of TasksBy Bess Levin
How does a nanny earn more than the average pediatrician? The simple answer is hard work — plus a strange seller’s market that follows a couple of quirky economic principles. A typical high-priced nanny effectively signs her (and they are almost always women) life over to the family she works for…And, alas, it seems that there just aren’t enough “good” nannies, always on call, to go around. Especially since a wealthy family’s demands can be pretty specific. According to Pavillion’s vice president, Seth Norman Greenberg, a nanny increases her market value if she speaks fluent French (or, increasingly, Mandarin); can cook a four-course meal (and, occasionally, macrobiotic dishes); and ride, wash and groom a horse. Greenberg has also known families to prize nannies who can steer a 32-foot boat, help manage an art collection or, in one case, drive a Zamboni to clean a private ice rink. [NYT via BI, related]
Bernanke Returns to Academic Roots to Justify Fed’s Existence (Bloomberg)
Bernanke will lecture to about 30 undergraduate students at George Washington University in the first of four hour-long talks on the history of the Fed as part of what public relations specialist Richard Dukas called a “P.R. offensive” to buff the central bank’s tarnished image. The Fed is being attacked from both the left and the right, with liberals criticizing it for not doing enough to bring down unemployment, and conservatives blaming it for doing too much and risking faster inflation…The lecture series — the brainchild of the Fed and the first by a sitting chairman — will be streamed live on the central-bank’s website and on ustream.tv. Afterwards, it will be posted on the Fed’s YouTube page. The central bank said transcripts also will be available. “I understand he’s excited about coming back and being in the classroom,” said Tim Fort, the professor in charge of the half-semester class.
Mets owners could actually make money in Madoff settlement (NYP)
Under the deal, Mets owners have agreed to pay back $162 million in phantom profits that they withdrew from their Madoff accounts between 2002 and 2008 — the year the Ponzi pyramid collapsed. Picard also dropped his claim that the owners were “willfully blind” to the scheme — allowing them to claim up to $178 million as victims of the fraud.
Goldman Sachs Cuts Staff in Annual Review Process (Reuters)
Goldman Sachs has begun a new round of staff cuts in its trading and investment banking divisions, three sources familiar with the matter said, a sign of continued cutbacks on Wall Street…The latest round of cuts is part of Goldman’s annual employee review process. It’s unclear how many people will be affected by the job eliminations, which began two weeks ago, because different divisions have received different targets, sources said. While management has formulated an overall plan for cost-cutting, all of the job cuts may not be completed for months, said a source familiar with the matter.
Deutsche Bank Cuts Board’s Pay 19% as Profit Goal Missed (Bloomberg)
Jain earned 5.81 million euros ($7.67 million) in salary and bonuses for last year, down from 7.55 million euros, Deutsche Bank said today in its financial report. Jain and the board’s other six members received 26.4 million euros compared with 32.4 million euros in 2010, when there were eight members.
Jefferies Net Down 12%; Revenue Tops Forecasts (WSJ)
Fixed-income trading revenue came in at $339.1 million in the quarter ended Feb. 29, up 6.6% from a year earlier and more than double what the firm booked in the prior quarter. Investment-banking revenue rose to $285.8 million, up 20% from a year earlier and 9.4% from the previous quarter. Overall, Jefferies reported a profit of $77.1 million, or 33 cents a share, compared with a year-earlier profit of $87.3 million, or 42 cents a share. Revenue increased 2.2% to $758.1 million. Analysts expected a per-share profit of 29 cents on $699 million in revenue, according to a poll conducted by Thomson Reuters.
The Banker And The Cabbie: When Two Worlds Collide (Reuters)
The day, December 21, 2011, had started out normally as Jennings left the kind of home – sweeping curved staircase, perfectly plumped chintz pillows, backyard swimming pool and a Ferrari in the garage – that makes many New Yorkers deeply jealous, and headed to the steel-and-glass tower in midtown Manhattan where he directed the firm’s bond business…Morgan Stanley has already placed him on leave. The firm’s spokesman declined to comment, other than to say no decision has been made regarding Jennings’ longer-term status at the firm. One top-ranking Morgan Stanley executive, though, said he “does not stand a chance of getting his job back.” Read more »
$$$ Mets owners reach a settlement with Madoff trustee whereby they pay $162mm, or receive $16mm, depending how you count [NYT]
$$$ S&P Volatility Falls Most Since FDR as Valuations Sink [Bloomberg]
$$$ Daniel Boulud made a meter-long ham sandwich festooned with miniature French flags for Jerry Lewis’s 86th birthday [NYP]
“Greg Smith got his 15 seconds of lame fame which is all it is. If he was a man and not a mouse, he would have taken the high road and become part of the solution – he would have become an agent of change. Instead, he’s just a quitter who never gave management an opportunity to respond before he verbally strafed the entire firm in print.” [85Broads]
Derivative Surprises Everyone By Accomplishing Purpose and Unwinding at Randomly Generated Market ValueBy Matt Levine
By happenstance, some of the new bonds Greece has issued in its restructuring have a market price close to the total value of the package creditors received — about 22 cents on the euro. Those bonds will help set the CDS payout, and trouble will be averted: CDS holders will receive about 78 cents, roughly equivalent to the loss bondholders suffered. …
If the new Greek bonds had different terms — higher or lower interest payments for instance — their prices could be substantially different, changing the amount the default swaps would pay. Ben Heller, a portfolio manager at New York hedge fund Hutchin Hill Capital, which owns both Greek bonds and CDS, said that means the swaps aren’t doing their job. He said that until the problem is fixed, he “will not use CDS as a hedge against credit exposures anymore.”
In fact Heller told Felix Salmon:
When you think about it, it’s a product that, on certain poorly defined credit events, offers a random payout. So if I want to do that, then I could play roulette at a casino.
So, first of all: yes! I think worry about the definition of credit events is a bit overblown, but the randomness of the payout is a real thing and bizarre and terrifying. It bears re-emphasizing that the method of calculating the Greek CDS payout bears no relation whatsoever to the default risk that it was supposedly hedging.
But, also: no! Read more »
Some stats and a message about life from Pool Manager NakedShort: “We currently have two overall leaders, with 50 points. Congrats to ‘Golden West’ and ‘Mike Courtney,’ who had nice opening weekends. Some other top performer stats: 4 people are tied with 49 points; 8 are at 48 (1 unlucky entrant picked Missouri to win); 7 are at 47 (Missouri and Duke each fucked one of you); 12 are at 46 (none of you picked any current losers!); “iluvmatt” is leading the 44s. The remaining 800 or so are frankly are horrible and should stop watching basketball entirely. For those unlucky souls who had their winner lose this weekend, turn up the speakers and join us in a good cry.” Read more »
Except for double-teaming clients, which was huge. Read more »