What's amazing is that some are so shocked the MUFG-Morgan Stanley deal happened:
As some of the readers here at Dealbreaker pointed out, Blodget seemed to have made his mind up last Monday that the deal wasn't going ahead. That's a bit odd: a deal can go any way.
Equally, short-sellers leaving positions running overnight on Friday must have worse risk systems than all of Wall Street's former MBS departments combined. If you were short Morgan Stanley through the weekend, there wasn't a lot more money you could have made on that trade -- your margin calls come Monday however, might have been horrific.
And so they were. Of course, no one except the banks themselves knew for certain if the deal was going through, but by the weekend, it was more obvious. Amazingly, Clusterstock is still lamenting that the $9 billion "may not be enough to save Morgan Stanley."
The reason there is such surprise over the MUFG-Morgan deal in some camps is perhaps because everyone looked at this as another Wall Street deal. This Wall Street-centric view is likely to materialize again, causing more pain to short sellers.
On Wall Street, banks don't buy other seemingly defunct banks five times over their market value in the midst of an equity crisis (they try to get a bargain instead). Tokyo however, has a very different philosophy.
Aside from it being odd that Clusterstock would take a view at all, thinking the deal wouldn't happen pretty much de facto is a bit naïve of MUFG's role in this deal, and of the Japanese banking system more broadly. First of all, MUFG is competing directly against Sumitomo, Mizuho, and Nomura back home, all of which have now gotten ties or direct exposure to the U.S. banking system in the recent market meltdown. That's not surprising: if you've ever worked for a Japanese bank you'll know how badly some more risk exposure is needed.
Second, the Japanese are notorious long-term investors, not at all like the hedge fund, quick money driven mangers in the west. In fact, that's exactly why banks in Japan are some of the few that have not been affected so much by the credit freeze.
Mitsubishi is looking to build a long-term, east-west banking powerhouse, not make a quick buck.