Central Banks Take Coordinated Action (WSJ)
We understand how things work on this world -- when there's a big problem, the government solution is usually to flood more money into the system, overnight and fast. That's not going away. In fact it seems to be accelerating, as the governments are holding each other hand in hand to stave off the mess. While you were sleeping, everyone was working together (US, Europe, Japan) to flood dollars into the market, lifting all boats in the process. It's almost beatiful seeing this level of peace and coordination. And to think everyone is on a different timezone, it truly drives home the impressiveness of working together. Still, memo: When this is all over. Please remember to sop up all those extra dollars and incinerate them as much as possible.
Morgan Stanley's talking to CIC, not Citic (FT Alphaville)
Citic, CIC. CIC, Citic. All the same difference, right? The point is they're talking to China (maybe). No, there is a diffrence. Citic is a bank that has seen its own shares fall from some of this whole mess. CIC is an SWF that already owns 9.9 percent of Morgan, and whose CEO even came to the US on Tuesday for a visit (where were those plane watchers who called the Sarah Palin veep nod?). Anyway, blame CNBC for squeezing a couple extra letters in.
Bad Bets and Cash Crunch Pushed Ailing AIG to Brink (WSJ)
This is now becoming a staple of modern, financial journalism -- The pointed, detailed look at the final precious moments before a firm either totally collapsed or partially collapsed. This one's long, and it's early, so we haven't read the whole thing yet. But we can confirm, courtesy of word search, that there's nothing about having ordered Chinese food in there (too bad). And here's a little internal perspective on that moment, when we learned that NY had freed up $20 billion for AIG to lend to itself: "The New York state superintendent of insurance, Eric Dinallo, told the firm he could allow the parent company to get access to about $20 billion from its subsidiaries; state regulators have oversight over how insurers use assets set aside for potential claims. Mr. Willumstad rushed to tell the executives and bankers: "We found $20 billion!" He left thinking AIG now only needed another $20 billion to avoid disaster."
HBOS agrees $22.2 bln bid (MarketWatch)
So that officially happened. HBOS, described as the WaMu of the UK, sold itself to Llyods TSB for $22.2 billion. That seems like a lot of the WaMu of anything, so it must not really be London's WaMu. Apparently our WaMu is still trying to figure something out, itself. Maybe Lloyds would like two for the price of one and get a US footprint?
Asia stocks fall, pare losses as central banks act (AP)
That coordinated global action: Apparently it helped turned a really bad day in Asia into just a sort-of one. Japan was still down, but only by a couple percent. Get this: Hong Kong was down 7 percent at one point, and then ended up slightly positive. That's a crazy, crazy day of trading for ya.
WaMu May Get Bids From JPMorgan, Citigroup, Bank of America (Bloomberg)
There may yet be a lifeline out there for 'em. From the article, it seems that these names aren't purely theoretical and that actual discussions are ongoing. The nice thing for WaMu is that it seems to have time. There doesn't seem to be any concern among its customers (well, mild concern), but from our perspective, it seems like ennui more than anything else.
Wingnuttery on CNBC (The Big Picture)
Ok, Barry... now it's on. The Big Picture blogger takes a shot at Michelle Caruso Cabrera, our favorite CNBC talking head, calling her a "wingnut" (or at least accusing her of wingnuttery) for asking Barney Frank whether some of the blame for the mess might be laid at the feet of regulation pushing banks, to, well, to put it succinctly, lend more to poor minorities (is what she's getting at). Frank seems to do a solid job of refuting this, but as it's not something we've looked at heavily, we can't really adjudicate this one. But... While on the one hand, our gut says that this problem goes way beyond something like that, on the other hand, we find it easy to imagine how good-minded regulation might create a gigantic mess. But beyond that, we really enjoy Michelle Caruso Cabrera standing up against the rush to regulation, when few are right now. She's come along way since she did sector watch. And if you haven't seen it, the clip from earlier this year when she grilled two senators on ag subsidies was one of the best things we've seen on TV, ever. So yeah, go Michelle.
Um, Hello? (1-2 Knockout)
As we like to say, placing blame on short sellers is truly the last refuge of a scoundrel... and really, the case against the case against short sellers hardly needs further effort. But anyway, here's another very solid rant/argument just to put in your library. Here's just one paragraph: "What makes this allegation even more interesting is that some of the biggest hedge funds are run by Banks. JP Morgan and Goldman Sachs rank amongst the top-10 largest hedge funds by AUM, Citigroup, HSBC, and a variety of other Wall Street firms are all in the top 50, with many more falling within the top 100 according to Institutional Investor. As if this weren't enough, independent hedge funds almost exclusively use Wall Street banks as prime brokers to clear their trades, lend them funds or stocks, and provide a variety of other services critical to their ability to carry on their operations. This is to say nothing of the trading desks WITHIN each bank tasked with trading the firms own account. Unless there was some strange, unheard of benevolence handed down from the Lloyd himself, do you really think the prop desk at Goldman wasn't shorting Morgan Stanley in serious size today, and vice versa, for example? Right."
Morgan Stanley and Wachovia (Megan McArdle)
Although this deal seems less likely than it was 12 hours ago, we still really like Megan McArdle's reaction: "I haven't seen such a natural match since Lisa Marie wed Michael Jackson." And beyond that, McArdle's been killing it lately on the subject of the financial crisis, so you should already be reading her.
Steve Schwarzman Is Not Freaking Out (peHUB)
Some interesting notes from a conference interview with Steve Schwarzman. Apparently the questioner didn't ask this question, but it's an interesting angle on the decline in leverage: "I wish she would have asked him to tell us: (A) How Blackstone has the personnel and infrastructure capacity to manage a portfolio with 10 times as many companies; " (That is, assuming the company still invests as much, but at much smaller deal sizes).