Rolling US Economy Into The Shitbin Thread

when Goldman crashes and Morgan Stanley starts getting lip action from suitors, you know the shit is hitting the fan

i love morbius on this thread

if we end the year with zero independent investment banks extant does that signify the end of an era?

Oh, to wonder where this sad little fucker ended up

remember the halcyon days when we just had threads that said "Real Estate bubble bust may be worse than Dot Com bubble bust;

WaMu up for sale
here

a fond look back:

The year-end bonus is a Wall Street tradition, and for a second consecutive year, the amounts are significant. Three major Wall Street firms - Goldman Sachs, Lehman Brothers and Bear Stearns - have reported record profits for the year and all are said to have given out handsome bonuses.

...One senior trader is building a sports complex for triathlon training at his house in upstate New York. It will include a swim-in-place lap pool, a climbing wall and a fitness center. Another bought an Aston Martin. For some, upgrading real estate is the first order of business.

... Another senior banker at a different firm, who is set to receive a $2.8 million bonus, said he had bought his wife a mink coat and was planning a weeklong skiing vacation out West. But he also said he intended to save most of the money. "We're not buying homes or boats, we're not spending on the big things," he said. "We are more relaxed and generous on the small things."

Of course, small is in the eye of the beholder. While the Maybach, an exclusive line of luxury cars made by Mercedes-Benz that starts at $315,000, appears on the wish lists of many bankers, relatively less expensive models from Aston Martin, Bentley and Maserati have also been popular. Michael Parchment, general manager for Miller Motorcars, a luxury dealership in Greenwich, said demand had been soaring.

"It's probably up 20 to 30 percent from the same time period last year," he said. "Unfortunately, production isn't up." The result, he said, are some unhappy bankers.

Next up.......Wachovia! Woo

Morgan Stanley Considers Merger With Wachovia
By BEN WHITE and ANDREW ROSS SORKIN
Published: September 17, 2008

Morgan Stanley, one of the two last major American investment banks, is considering a merger with the Wachovia Corporation or another bank, according to people briefed on the discussions.

The Morgan Stanley chief executive, John J. Mack, received a telephone call on Wednesday from Wachovia expressing interest in the Wall Street bank. Morgan Stanley is considering other options as well. Other banks have also expressed interest in Morgan Stanley.

The talks are preliminary and no deal may emerge.

Wachovia declined to comment.

Shares of Wachovia fell 20.76 percent, or 2.39 percent, to $9.12; Morgan Stanley declined 24.22 percent, or $6.95, to $21.75.

Wow, it's like everything some blogger said might go wrong is going wrong!

So is the end result of this debacle like 2-3 megabanks who run everything under the sun?

Well, at least until the revolution.

http://static.rateyourmusic.com/album_images/87278.jpg

http://online.wsj.com/article/SB122168156315148901.html?mod=testMod

After Morgan Stanley's precipitous decline in the last few days, its market value is only slightly above Wachovia's, so the likeliest combination would be a merger of equals. Wachovia also has been pounded by the mortgage mess, including its ill-fated acquisition of Golden West Financial Corp. in 2006. Wachovia's $25 billion purchase of Golden West at the height of the housing boom exposed it to large mortgage losses. The Charlotte, N.C., bank has said it believes losses for Golden West's "payment option" loan portfolio could eventually reach 12%.

But many analysts believe the losses from that portfolio may exceed 12 %.

"Is it going to be 20 percent? Is it going to be 30 percent?" said Nancy Bush of NAB Research LLC in Annandale, N.J. "Nobody knows." New CEO Robert Steel is "to some degree hostage. A hostage of the numbers that have been handed to him." Wachovia has created a distressed asset resolution team to work through the problem loans and refinance mortgages where possible. "I don't think they have many options," Ms. Bush said. "There is nobody they can sell this stuff to."

Morgan Stanley said Wednesday it was doing everything it could to shore up a rapidly sinking stock price.

So Charlotte is the new New York then, with BoA buying Merril, and Wach buying MS

So is the end result of this debacle like 2-3 megabanks who run everything under the sun?

And a US cabinet appointee who sits on the board of all the other banks.

http://ecx.images-amazon.com/images/I/51Q8N7Y25PL._SS500_.jpg

i has new bank account lol

in case jon is wondering why there are so many hsbc branches in chinatown, "hsbc" stands for "hong kong shanghai banking corporation"

Although it has been British headquatered and listed since 1997.

i wonder if there were brits pulling the strings even before then..

Personally I'd be looking at Barclays or Citi for banks with a bit of resilience, they have Dubai and china as large stockholders. (RBS and HSBC will probably be OK too, RBS own people's bank in the US)

Wow. WSJ: Worst Crisis Since '30s, With No End Yet in Sight

The latest trouble spot is an area called credit-default swaps, which are private contracts that let firms trade bets on whether a borrower is going to default. When a default occurs, one party pays off the other. The value of the swaps rise and fall as the market reassesses the risk that a company won't be able to honor its obligations. Firms use these instruments both as insurance -- to hedge their exposures to risk -- and to wager on the health of other companies. There are now credit-default swaps on more than $62 trillion in debt, up from about $144 billion a decade ago.

also, for those wondering which mattress to hide their cash in:

http://online.wsj.com/article/SB122169783324750379.html?mod=todays_us_personal_journal

if only bush had allowed us to put our social security money into the stock market, the way he wanted to

"John McCain supports supplementing the current Social Security system with personal accounts"

http://www.johnmccain.com/Informing/Issues/0B8E4DB8-5B0C-459F-97EA-D7B542A78235.htm

As we fix Social Security, we must make it a better deal for our younger workers by allowing them to put part of their payroll taxes in personal retirement accounts.

* Personal accounts would be entirely voluntary.
* The money would go into a conservative mix of bond and stock funds that would have the opportunity to earn a higher rate of return than anything the current system could provide.
* A young person who earns an average of $35,000 a year over his or her career would have nearly a quarter million dollars saved in his or her own account upon retirement.
* That savings would provide a nest egg to supplement that worker’s traditional Social Security check, or to pass on to his or her children.
* Best of all, it would replace the empty promises of the current system with real assets of ownership.

http://www.whitehouse.gov/infocus/social-security/

ZZZZZZZZZZZZZZZZZZZZZZzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

you're snorin again, grandpa

Comment on Friedman's latest NYTimes column:

"The regulation of the casino industry is far, far more comprehensive and effective than that of Wall Street."

John G., NYC

comprehensive? no. effective. . .probably?

Ex-SEC regulator lays blame for I-bank blow-ups at the feet of a 2004 SEC rule change:

http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/

I wouldn't treat the NYSun as if it has reliable/depentable sources/commentators

Well, if you don't trust the Sun, here's the same allegations on The Big Picture and an excerpt of an article the guy wrote in American Banker:

http://bigpicture.typepad.com/comments/2008/09/regulatory-exem.html#more

Oh THIS is funny...

John McCain has two words for Securities and Exchange Commission Chairman Christopher Cox: You’re Fired.

“The chairman of the SEC serves at the appointment of the president and has betrayed the public’s trust. If I were president today, I would fire him,” McCain says, according to excerpts for a speech on reforming the ailing U.S. financial markets he will deliver today in Cedar Rapids, Iowa.

http://upload.wikimedia.org/wikipedia/commons/thumb/c/c6/ChrisCox.jpg/160px-ChrisCox.jpg

"Hey, wha' happen?"

im goin get my ol' WPA job back.

http://www.archives.gov/exhibits/new_deal_for_the_arts/images/work_pays_america/images/ccc_work_play_health.jpg

Bearish.

So where do we go from here?

I will venture out a brief distance onto an anonymous limb and make a few irresponsible predictions as to what might happen over the next several months. Let us hope I am proved wrong.

We have not seen true capitulation in the markets yet. When it comes, it will come in the form of one or more days with stocks declining closer to 10% a day than 5.

Volatility is going to the moon, with the result that a lot of short sellers are going to get slaughtered, too. There will be no safe haven in this storm.

Morgan Stanley: gone. Goldman Sachs: gone, or mortally wounded.

Timothy Geithner of the New York Fed: Interim Dictator of the United States, or dead in a ditch from a terrorist bomb thrown by someone who has finally figured out who actually runs this country.

Dick Fuld, John Thain, John Mack, and Hank Greenberg: strung up in Times Square with piano wire by rampaging mobs of disgruntled shareholders.

Having fun yet?

The uk regulators have banned shorting banking stocks. Not sure how effective this is going to be.

Dick Fuld, John Thain, John Mack, and Hank Greenberg: strung up in Times Square with piano wire by rampaging mobs of disgruntled shareholders

If I were a Merrill shareholder, I'd think Thain is a hero, at least compared to those other guys.

Wachovia and Morgan close to tying up, who's going to get goldman? RBS, Santander, HSBC, Deutsche? Can't see it being a US bank, who is left?

BNY/Mellon, if they don't go with Morgan Stanley first?

Well seeing as morgan and wachovia ...

Good Economist article on the future of I-banks, and why the suddenly popular universal bank model may not be a good long-term solution:

http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=12274054

that is not a good article
that is a page from a college textbook that takes no stance whatsoever
I really, really hate what the latest ed in chief has done to that magazine

that is a page from a college textbook that takes no stance whatsoever

I think that's probably why I liked it.

The uk regulators have banned shorting banking stocks. Not sure how effective this is going to be.

Wouldn't a ban on short selling allow an overvalued stock to remain so for longer? So once investors decide to bail there's pretty much the same effect, especially in a climate of complete panic.

Banning short selling is dumb. Total blame the messenger stuff. Are they going to ban put options too?

^^

HBOS price tumbled because it was in danger of dying this week, not because of short selling