NWR: Financial chaos

S

SFJoe

Joe Dougherty
They were not my favorite people on the planet, many of them, but it's astonishing to see Lehman bankrupt and Merrill sold tonight. I worked at LEH for a while, and we survived 9/11 and the destruction of our headquarters. But they became more "them" than "us" to me since.

Anyhow, we're in a pretty scary state for the financial system globally. Hope we find a better solution than lurching between total deregulation on the one hand and buying every asset into the USG on the other.
 
originally posted by SFJoe:
Anyhow, we're in a pretty scary state for the financial system globally. Hope we find a better solution than lurching between total deregulation on the one hand and buying every asset into the USG on the other.
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I was thinking of you when reading the NYT headlines tonight, as I recalled some former association with Lehman. Talk of AIG's problems seems to paint a picture of much broader problems than I had realized. As Jean said to me, "is it time to put money under the mattress?" Hope your business isn't too affected by all this.

Mark Lipton
 
originally posted by MLipton:
Hope your business isn't too affected by all this.
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My plan is that we're the last bank standing, and we clean up.

I was concentrating in recent weeks on making us too big to fail, but that doesn't look like the way to go this weekend.

Of course, we're definitely down from our previous 50:1 leverage.
 
Just a thought for the almighty Politburo--with all this recent NWR stuff, would it be crazy to have a Non-Wine topic forum like we used to have on therapy? So vandergrift can have somewhere to discuss rugby, or soccer, or whatever that sissy euro-sport he likes is?

And no, I'm not going to harp on the need for a preview function, not this time. I'm staying on message.

Isn't Bassman a Lehman Brother? Where is he these days?
 
originally posted by SFJoe:
Of course, we're definitely down from our previous 50:1 leverage.
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Can I move my 401K to your company? I'd be happy to give you all $6000 of it to do with as you wish. At this point I think I should be able to comfortably retire in about 2074.

originally posted by SteveTimko:
Imagine how vulnerable we'd be to a 9/11-style terrorism attack now.
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Why now more than any other time? We're already under attack .

originally posted by Chris Coad:
And no, I'm not going to harp on the need for a preview function, not this time. I'm staying on message..
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Good for you in your stalwart devotion to The Message . I'm happy to pick up the "bring me a goldurn preview function!" cudgel in your absence. I'll admit that I kind of like the adrenalin rush I get when I push ADD - there's always this twinge of "I wonder what it's gonna look like?" emotion at that moment. It would be nice if there were little thingies that would do italics and quotes and URL links but it's probably just as well that I learn to do that HTML thing because I'm probably going to be competing with a lot of stockbrokers for work soon and it'll be good to have some useful skills to brag about on the ol' cv.

-Eden (and watch out for the terrorists from the north too)
 
The headlines are indeed very scary. It's not hard to imagine a very severe spiraling down the drain from here.

Eden, you are right, we are already under attack. Strangely, the vlm has just provided me with a coping mechanism (other than just drinking) that I hope sees me through the siege.
 
originally posted by Eden Mylunsch:

originally posted by SteveTimko:
Imagine how vulnerable we'd be to a 9/11-style terrorism attack now.
Click to expand...

Why now more than any other time? We're already under attack .
Click to expand...

Bin Laden's goal wasn't just to topple the World Trade Center it was also to topple the U.S. economy. He gave it a good shove but didn't topple it. We're much deeper in debt now. There's nothing on the horizon to pull our economy out of a tailspin. Not the housing market, not the auto industry, not technology. A major terrorism attack could leave us with no economic engine, with China, Japan, the Arabs and Great Britain no longer willing to buy our debt and hyperinflation when all the currency gets pulled out of our economy.
 
originally posted by SteveTimko:
originally posted by Eden Mylunsch:

originally posted by SteveTimko:
Imagine how vulnerable we'd be to a 9/11-style terrorism attack now.
Click to expand...

Why now more than any other time? We're already under attack .
Click to expand...

Bin Laden's goal wasn't just to topple the World Trade Center it was also to topple the U.S. economy. He gave it a good shove but didn't topple it. We're much deeper in debt now. There's nothing on the horizon to pull our economy out of a tailspin. Not the housing market, not the auto industry, not technology. A major terrorism attack could leave us with no economic engine, with China, Japan, the Arabs and Great Britain no longer willing to buy our debt and hyperinflation when all the currency gets pulled out of our economy.
Click to expand...

And then, at night, the ice weasels come.
 
originally posted by SFJoe:
NWR: Financial chaos
Hope we find a better solution than lurching between total deregulation on the one hand and buying every asset into the USG on the other.
Click to expand...

I know that many in the financial community are loathe to consider it, but isn't the big problem that the financial markets were overly unregulated? When you let a bank lend whatever they want to whoever they want and then allow the bank to securitize the loan, transferring the risk, the originator of the loan no longer cares if the loan is repaid.
 
originally posted by scottreiner:
originally posted by SFJoe:
NWR: Financial chaos
Hope we find a better solution than lurching between total deregulation on the one hand and buying every asset into the USG on the other.
Click to expand...

I know that many in the financial community are loathe to consider it, but isn't the big problem that the financial markets were overly unregulated? When you let a bank lend whatever they want to whoever they want and then allow the bank to securitize the loan, transferring the risk, the originator of the loan no longer cares if the loan is repaid.
Click to expand...
Don't look at me, I think getting the regulation right is essential. I'm not sure that securitized loans are instruments of the devil, but I can't figure out why Bear and Lehman had massively levered portfolios of that sort of thing on their books. As a guy I know at a solvent I-bank puts it, "we're in the moving business, not the storage business."
 
originally posted by Bwood:
The headlines are indeed very scary. It's not hard to imagine a very severe spiraling down the drain from here.

Eden, you are right, we are already under attack. Strangely, the vlm has just provided me with a coping mechanism (other than just drinking) that I hope sees me through the siege.
Click to expand...

Yes, VLM sent me a link to the same coping mechanism.

-Eden (I need these economic travails like I need a hole in my head)
 
originally posted by SFJoe:
originally posted by scottreiner:
originally posted by SFJoe:
NWR: Financial chaos
Hope we find a better solution than lurching between total deregulation on the one hand and buying every asset into the USG on the other.
Click to expand...

I know that many in the financial community are loathe to consider it, but isn't the big problem that the financial markets were overly unregulated? When you let a bank lend whatever they want to whoever they want and then allow the bank to securitize the loan, transferring the risk, the originator of the loan no longer cares if the loan is repaid.
Click to expand...
Don't look at me, I think getting the regulation right is essential. I'm not sure that securitized loans are instruments of the devil, but I can't figure out why Bear and Lehman had massively levered portfolios of that sort of thing on their books. As a guy I know at a solvent I-bank puts it, "we're in the moving business, not the storage business."
Click to expand...

I was in no way pointing any fingers at you...

But, I have some question for you. As someone in the financial community, is there a time in the past where you think we had the regulation right? Is it possible for regulators to effectively regulate an international market where financial instruments evolve so quickly? If so, is our current system up to the task, given some future willingness by the White House?
 
As someone in the financial community, is there a time in the past where you think we had the regulation right? Is it possible for regulators to effectively regulate an international market where financial instruments evolve so quickly?
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No regulations are perfect and no laws are perfect. Just because 100% of criminals are not effectively prosecuted doesn't mean we shouldn't have laws against murder.

That said, I think your question is worth asking, especially because these financial tools develop so quickly (unlike the more conventional tools for murder).
 
It's a very long story, and I am mostly hanging on to my little piece of the elephant. I think the recent attitude in Washington has lacked a conceptual framework from which to regulate. They were essentially hostile to the idea, wanted 100 flowers to bloom, and etc. And then they found themselves in crises, lurching to improvise post hoc solutions. It's embarrassing how far behind the curve they've been.
 
originally posted by SFJoe:
It's a very long story, and I am mostly hanging on to my little piece of the elephant. I think the recent attitude in Washington has lacked a conceptual framework from which to regulate. They were essentially hostile to the idea, wanted 100 flowers to bloom, and etc. And then they found themselves in crises, lurching to improvise post hoc solutions. It's embarrassing how far behind the curve they've been.
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As a life-long elephant I must say the Bush years have shook me. I am reminded of the old saying, "Republicans say government doesn't work, then they get elected and prove it."

As to behind the curve, is it time to throw money at the problem? By that I mean, should we start paying the regulators the same that those creating the new financial instruments are making? Then maybe we would get some of the best and brightest.
 
The beginning of the end was under Reagan (I think) when they allowed banks to handle investments. That signalled the capitalist free-for-all that has led to the no-morals-needed state of things today.
 
originally posted by Jeff Grossman:
The beginning of the end was under Reagan (I think) when they allowed banks to handle investments. That signalled the capitalist free-for-all that has led to the no-morals-needed state of things today.
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The repeal of Glass Segal?
 
Where does the ice weasel reference come from, Chris? A friend of mine from long ago used it, and I was just thinking about this expression yesterday.
 
I don't think anyone will really care but some of the financial engineering that constituted the good bank bad bank 'solution' mooted over the weekend for Lehman was just about legal.

But what carnage, even out here in Asia.
 
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