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"The Only Person Who Wasn't Responsible For [Bear's] Demise Is O.J. Simpson"

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Earlier this morning we discussed the Bryan Burrough's Vanity Fairarticle on the downfall of Bear Stearns. Since I am simpleminded and can only focus on one thing at a time--that god damn breakfast--I thought I'd share this email that's been circulating, which parses the piece in its entirety.

I read the VF piece last night. It was written almost completely from Bear's point of view. The thesis-- and the cut line-- evil short-sellers, nervous Fed officials and dupes at CNBC brought down a shining light of American capitalism in one of the biggest financial scandals ever-- is a C-R-O-C-K of S-H-I-T. Bear Stearns was massively overleveraged, and they lost more than 10-billion of their clients' money (and at least 3 billion of their own) in those two toxic waste hedge funds that imploded last July. Half of Wall Street and much of the intelligent financial press and blogosphere concluded that Bear was dead then and there. Cultural aspects of the firm also contributed to its demise: and their unwillingness to help prop up Long Term Capital Management in 1998, when literally every other firm on the street put billions on the line, was not something the rest of them forgot.
Much of the author's "exhaustively detailed portrayal" was already exhaustively covered in the Wall Street Journal's 3-part series on Bear's demise. Some of it (the Jamie Dimon birthday dinner phone call) seems directly lifted, or at least fed to both reporters by the same source.
And the central premise: that rapacious shorts used rubes at CNBC to spread rumors that forced the company into a death spiral is backed up by exactly nothing. He throws out the names Steve Cohen (of the hedge fund SAC Capital Management) and Ken Griffin (of Citadel) at the end of the piece saying perhaps they were behind it all. He produces no evidence and not even an on-the-record statement implicating them. He tries to portray Gasparino as a tool of the shorts, but then we hear about him doggedly trying to get the company's CFO on the phone for more info. The author admits that Bear hurt itself when Maria Bartiromo got the elderly Ace Greenberg on the phone and he denied the liquidity rumors outside the chain of command. That's being a dupe? And when they finally allowed the CEO Alan Schwartz to be interviewed by David Faber, the author tries to make the case that Faber's asking Schwartz about a trader who refused a trade with Bear-- something that was true-- that this one question was the straw that broke the firm's back. So lemme get this straight: Faber should have been suspicious of a trader's motives in telling him that his/her firm was backing away from trading with a firm that was listing like the Titanic. Scandal! As if CNBC has that much sway. Every media outlet on earth was on a Bear deathwatch at the time including the WSJ. The author of the VF piece also heaps blame on Goldman and Credit Suisse. Jesus Christ the only person who WASN'T responsible for their demise is O.J. Simpson.
Bear Stearns business practices were fundamentally unsound during the credit bubble. They deserved to go out of business. They weren't "killed off by the shorts and CNBC" they killed themselves with leverage. In my opinion, "the biggest financial scandal ever" is how the Fed forced $29 billion of Bear Stearns credit risk onto the taxpayer. That's a story a serious journalist in a serious publication should cover.


Bill Gross Is Not The Only One Who Feels Fat

Are your pants getting a little tight? Have you become convinced mirrors have a personal vendetta against you? Are you too distracted by the rolls spilling over your pants to trade? Do you find yourself veering off course in your letters to investors to talk about your love handles? Is it only a matter of time before you lose your firm billions and/or take down the entire market because your fingers are so big they span four keys each on the keyboard? Do you want to do something about it but are repulsed by the idea of healthy eating and exercise and also know yourself well enough to realize that there is no way you're going to be able to stay strong if everyone around you is eating delicious fried food at lunch and sooner or later you, a usually pretty mild-mannered guy, will be leaping across a row of Bloomberg terminals and threatening to kill a coworker (and meaning it) unless he hands over Ho Ho now? Then round up your tubbiest colleagues and tell them they're in for a real treat. Eric Helms, who founded the four-year-old Cooler Cleanse company with the actress Salma Hayek, says office cleansers now make up 30 percent of his business, and in the last year he has hired three customer-service employees just to handle the details of them. He said there has been a “huge increase in popularity” of cleansing with co-workers in the last year, which he credits to juice diets being more mainstream. “Everyone knows someone who’s done one, and they realize they’re a lot easier to do with colleagues during the workweek,” he said. “People want to indulge” — not sip celery — “on weekends.” Recent six-juice-a-day-dieters include employees at Merrill Lynch and the Carlyle Group, she said. In May, Citigroup began offering BluePrintCleanse in some of its Manhattan cafeterias, a spokeswoman said...About two-thirds of cleanse clients over all are women, but corporate cleanses “commonly skew toward men, especially traders, investment bankers and lawyers,” said Jina Wye, director of sales and marketing for BluePrintCleanse, founded in 2007 by two former Hudson Hotel bartenders looking to swap their poisons. (Mr. Helms said 90 percent of his male customers are part of groups.) Ms. Wye said: “These Type-A men have an all-or-none perspective. If they’re going to commit, they do it whole hog.” Most popular among male en masse cleansers: the Excavation cleanse, described on the Web site as “the most intense.” And if you want to really crank things up a notch, consider gauging interest in a group colonic to top things off. Cleansing From Cubicle To Cubicle [NYT] Related: I’m afraid I might tell her to buy a gun and just shoot me before the fat and the cellulite strike again.

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