Wednesday Reads
By Barry Ritholtz - October 21st, 2009, 4:00PM
Some quickies for hump day:
• Late edition bonus: Pay Czar to Slash Compensation at Seven Firms (WSJ)
• Car Czar Shocked by Detroit (Fortune)
• Blame It All On Ayn Rand (MarketTalk)
• How to manage the gigantic financial cuckoo in our nest (FT)
• Imperialism, Goldman Sachs Style (NYT)
• Bailout’s hidden costs (CNN/Money)
• Wall Street on edge as SEC top cop gets aggressive (Reuters)
• Persistent pessimism (Marketwatch)
• Google To Release New Music Service (TechCrunch)
• The 8 Best Viral Advertising Videos of 2009 (So Far)
What are you reading?
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October 21st, 2009 at 4:09 pm
Market looks like very fragile.
October 21st, 2009 at 4:12 pm
Outside down day (S&P 500) as USD/EUR crosses 1.50!
U.S. to Order Steep Pay Cuts at Firms That Got Most Aid
http://www.nytimes.com/2009/10/22/business/22pay.html?hp
The Warning (55 minutes long)
http://www.pbs.org/wgbh/pages/frontline/warning/view/
How Paulson gave Goldman the Lehman heads-up
http://blogs.reuters.com/felix-salmon/2009/10/21/how-paulson-gave-goldman-the-lehman-heads-up/
Bernanke Frets Over Sherlock Holmes’s Next Stop: Caroline Baum
http://www.bloomberg.com/apps/news?pid=20601039&sid=aTLvGA2qdZ9k
October 21st, 2009 at 4:26 pm
Goldman Sachs executive to starving Americans: Drop Dead.
http://www.bloomberg.com/apps/news?pid=20601087&sid=adpR6SEZyBa4
October 21st, 2009 at 4:26 pm
In defense of the income gap and compensation for bankers:
“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,” Brian Griffiths, a Goldman Sachs International adviser who was a special adviser to former British Prime Minister Margaret Thatcher, said yesterday at a panel discussion at St. Paul’s Cathedral in London.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8upOpH5Q3Tw
Somewhere, there’s a redneck fixin’ to lose a double-wide who agrees with this vampire squid.
October 21st, 2009 at 4:31 pm
this article has a familiar ring to it…
http://www.bloomberg.com/apps/news?pid=20601068&sid=a9pqrCs2M.G0
October 21st, 2009 at 4:38 pm
“OKLAHOMA CITY (Reuters) – A $29 billion trail from the Federal Reserve’s bailout of Wall Street investment bank Bear Stearns ends in a partially deserted shopping center on a bleak spot on the south side of Oklahoma City.
The Fed now owns the Crossroads Mall, a sprawling shopping complex at the junction of Interstate highways 244 and 35, complete with an oil well pumping crude in the parking lot — except the Fed does not own the mineral rights…”
“…That money was secured by a portfolio of Bear assets. Crossroads Mall is the only bricks and mortar acquired through bailout. The remaining billions are tied up in invisible securities spread across hundreds, if not thousands, of properties.
It is hard to be precise because the Fed has not published specifics on what it now owns. The only reason that Crossroads Mall has surfaced is that it went into foreclosure in April…”
http://uk.reuters.com/article/idUSTRE59K01420091021
~~
“First, we have Martin Philbert, who is the chairman, on the committee that is expected to release their opinion this month on the safety of Bisphenol A. This is the chemical used in items such as baby bottles, reusable food containers and plastic wraps. Next, Martin Philbert is also the founder and co-director of University of Michigan Risk Science Center. Now here’s where the conflict begins…”
http://tpzoo.wordpress.com/2008/10/15/fda-chairman-took-5-million-donation-%E2%80%93-%E2%80%9Cno-conflict-of-interest%E2%80%9D/
~~
it’s too bad these guys http://www.ratefinancials.com/ , as ex., don’t do Govvie/FedRes work..
what is it that the DOJ does, again?
~~
“In 2000, America was described as the sole remaining superpower – or even the world’s “hyperpower”. Now we’re in real trouble (at the very least, you have to admit that we’re losing power and wealth in comparison with China).
How did it happen so fast?
As everyone knows, the war in Iraq – which will end up costing $3-5 trillion dollars – was launched based upon false justifications. Indeed, the government apparently planned both the Afghanistan war (see this and this) and the Iraq war before 9/11.
And the financial system collapsed last year due to looting and fraud.
How Empires Fall
But Paul Farrel provides a bigger-picture analysis, quoting Jared Diamond and Marc Faber.
Diamond’s book ‘s, Collapse: How Societies Choose to Fail or Succeed, studies the collapse of civilizations throughout history, and finds:
Civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power…
One of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions…
http://www.washingtonsblog.com/2009/10/how-did-america-fall-so-fast.html
October 21st, 2009 at 4:38 pm
Car Czar, Steven Rattner says:
“Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.”
How is it possible that anyone could be shocked by anything that happened at GM. This company has been a mess since the sixties.
What a great example of how nearly EVERYBODY in positions of power and influence in this country are there because they have perfected the art of lying. The great sell-out of the American professional class.
October 21st, 2009 at 4:47 pm
Brian Griffiths has a Marie Antoinette moment.
GM: The Tyranny of the Incompetent™.
October 21st, 2009 at 4:48 pm
“Wal-Mart announced hundreds of millions of dollars in price cuts for the holidays shortly after 2 PM ET; this is potentially going to kill prices (margins) in retail; retail stocks drop on the news. WMT down 2.3 percent.”
looks like Christmas won’t be so “special” this year- coudn’t be happier-
i am so sick of the commercialism of this holiday- as my kids have gotten older i have weaned them from the bacchanalia of gifts that xmas has become-
i think it was the Lexus commercials w/ the white Lexus wrapped in a big red bow that sent me over the edge
October 21st, 2009 at 4:50 pm
impermanence Says: What a great example of how nearly EVERYBODY in positions of power and influence in this country are there because they have perfected the art of lying.
I learned years ago that those at the top are usually – make that almost always – the amoral sociopaths who can look you in the eye and lie with conviction. That is how they make it to the top.
To which I will quote ad nauseum:
“And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that. All power corrupts; absolute power corrupts absolutely.”
October 21st, 2009 at 4:51 pm
another repost- posts are disappearing on me-
“Wal-Mart announced hundreds of millions of dollars in price cuts for the holidays shortly after 2 PM ET; this is potentially going to kill prices (margins) in retail; retail stocks drop on the news. WMT down 2.3 percent.”
looks like the ‘holidays” won’t be so “special” this year
October 21st, 2009 at 4:56 pm
“Under the plan, which is expected to be officially released by the Treasury Department next week, annual salaries for executives at those seven firms are expected to fall 90%, on average, according to reports.
Within AIG’s controversial Financial Products division, the unit that led to the company’s near collapse, no employee is expected to receive more than $200,000 in total compensation”
What’s the world coming to?
October 21st, 2009 at 5:00 pm
Dylan has HAD IT with the wretched Vampire Squid:
http://www.zerohedge.com/article/ratigan-throws-down-gauntlet-goldman-sachs
October 21st, 2009 at 5:02 pm
http://www.ft.com/cms/s/0/aab01ac6-bda3-11de-9f6a-00144feab49a.html
Italian police close in on ‘toxic’ shipwreck
A mission was launched on Tuesday off the Italian coast to investigate what anti-Mafia investigators have long suspected was a conspiracy between organised crime, industrialists and government agencies to dump nuclear and other toxic waste in the Mediterranean and off Africa.
An Italian marine survey ship under police protection started tests 12 miles off Calabria’s coast on the wreck of a cargo ship 500 metres below.
ccording to Francesco Fonti, a Mafia turncoat, the ship was scuttled in 1992 carrying 120 barrels of toxic materials – much of it possibly radioactive. The ship, identified by Mr Fonti as the Cunski, is one of three vessels carrying toxic cargoes he says he sank as a service provided by the ’Ndrangheta, the Calabrian Mafia.
Over two decades Italian prosecutors have looked into more than 30 such suspicious deep-water sinkings. They suspect that Italian and foreign industrialists have acted in league with the Mafia, and possibly government agencies, to use the Mediterranean as a dumping ground. Vessels sank in fair weather had suspicious cargo, sent no mayday or the crew vanished. None had been located, until now.
Fishermen and political leaders in Calabria, alarmed at the possible environmental disaster, are protesting. Local mayors rallied in Rome on Tuesday to press the government to act quickly. Brussels has also added its voice. A letter sent last month by Stavros Dimas, European environment commissioner, seeking clarification from Italy, has so far gone unanswered…..
————————————————————————————–
Heard rumors of this a few years back…
October 21st, 2009 at 5:02 pm
So, renting a home in the Hamptons next summer is out of the question?
October 21st, 2009 at 5:10 pm
Barry, do you or Peter have any insights into this? I can’t evaluate ZH posts most of the time, but TD is adamant:
http://www.zerohedge.com/article/mondays-fed-reverse-repo-test-disaster
October 21st, 2009 at 5:27 pm
Blaming Ann Rynd for the financial crisis is like blaming Jesus for…
Oh, nevermind.
October 21st, 2009 at 5:31 pm
@ MEH:
Regarding, “One of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions…”
Or in the words of Mr Armstrong:
“Where is our Cincinattus?”
October 21st, 2009 at 5:39 pm
If we have a “jobless recovery” (which I think it will be labeled as such soon), is it really a “recovery” at all?
http://www.calculatedriskblog.com/2009/10/macroblog-growing-case-for-jobless.html
October 21st, 2009 at 5:42 pm
Been telling you for years that Wall Street is just a conduit for hookers and coke dealers:
http://www.nydailynews.com/money/2009/10/20/2009-10-20_court_papers_give_glimpse_of_bernie_madoffs_life_behind_bars.html
October 21st, 2009 at 5:44 pm
“If we have a “jobless recovery” . . . is it really a “recovery” at all?”
good point manny
October 21st, 2009 at 5:46 pm
Mervyn King aligns with Volcker on TBTF. Is there hope after all?
http://baselinescenario.com/2009/10/21/the-consensus-on-big-banks-begins-to-move/
October 21st, 2009 at 5:46 pm
@lb: LOL! Of course you’re right though. What else would these scoundrels do with their ill-gotten gains? In the end, everything is about sex.
October 21st, 2009 at 5:50 pm
EBAY earnings not exactly top notch.
http://www.bloomberg.com/apps/news?pid=20601087&sid=avD5RUmPv8h0
October 21st, 2009 at 6:02 pm
dollar carry trade: http://www.google.com/trends?q=dollar+carry+trade&ctab=181572800&geo=all&date=all
October 21st, 2009 at 6:02 pm
I-Man,
If I’m recalling correctly, He’s, still, in the Field.
He was summoned, by others, to assist, no?
but, past that, We’ve some serious problems that have been ‘back-burnered’, in many minds, by the recent Ramp. Maybe, the coming Sell-Off will clear a few more minds..
Though, I wonder if we would even know Cincinattus, if he strode among us (?)
More importantly, People, each and every, need to be more responsible for their own interests. No matter which one, there’s only so much a ‘Leader’ can do. And, on the flip-side, the less the Individual can do for himself, the more a, bad, ‘Leader’ can get away with..
October 21st, 2009 at 6:12 pm
This person said Wednesday that the Treasury Department will announce the deep pay cuts within the next few days.
Kenneth Feinberg, the special master at Treasury appointed by President Barack Obama to handle compensation issues at the seven firms getting exceptional assistance from the government’s $700-billion (U.S.) financial bailout package, is making the pay decisions.
The seven companies are: Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler Group LLC and Chrysler Financial.
Total compensation for the top executives at the seven firms will decline, on average, by about 50 per cent, according to the person familiar with the administration’s decision
—————-
I’ve got my popcorn.
October 21st, 2009 at 6:12 pm
Some more perspective on financial journalism from Jesse, after yesterday’s meltdown by Kneale/Cabrera.
http://jessescrossroadscafe.blogspot.com/2009/10/when-financial-journalists-were-pimping.html
October 21st, 2009 at 6:16 pm
Mannwich: Of course the earnings were BTE, as is usual these days, but EBAY threw in a different scenario going forward which spooked people by guiding lower. Then, on the earnings call, the CEO said they will be very aggressive with pricing (see ahab’s WMT post) while the CFO said exactly what every other retailer is saying, “We are cautiously optimistic going into the Holiday Season.”
Retail Sales for October are going to be better than most think IMO and according to reports from various retailers half way through the month. However, we have trained the consumer very well by slashing everything last year to giveaway prices to reduce revenue. Retailers had to restock inventories but are and have done so by offering less. They don’t want to get burned again. But now, with a consumer that will be looking for big, gigantic discounts, how can they do this without substantially cutting into margins? Retailers don’t have the leeway to lower prices as much this year.
Couple all that with unemployment much higher than last year and I believe a short position on Retail (XLY) after October sales reports will be an excellent play. Again, JMO.
October 21st, 2009 at 6:17 pm
Cramer ranting insanely about “bear raids” and hedge funds “spreading rumors” last fall. Or perhaps, truth?:
http://www.cnbc.com/id/33397807
October 21st, 2009 at 6:27 pm
how many bear raids are there on Apple and Intel?
Cramer can bitch and moan about how the “big bad bears” caused so much havoc- but what he fails to mention is that the short interest is in stocks that are shaky at best and most likely abysmal-
the banks and the agencies brought on their own problems- bears are the one who profit from it-
end of story
October 21st, 2009 at 6:40 pm
also-
regarding Cabrera- who did she think she was to challenge Jerry Brown? and saying that it is for publicity to run for governor-
this isn’t some up and comer that is trying to get recognized- pretty much a houehold name in CA- he pretty much shut her down when she popped off-
i like that dude- liked him when he ran for President in 1992 and saw him campaigning in Alexandria VA-pretty straight up- the only one of the candidates at that time talking about scrapping the tax code- not a particularly popular postion at the time-
i’d vote for him- guaranteed that these TBTF banks would have gotten treated a bit differently under a Jerry Brown Presidency
October 21st, 2009 at 7:00 pm
House Agriculture Panel Approves Bill on Derivatives (Update1) – Bloomberg.com
http://www.bloomberg.com/apps/news?pid=20601087‘>http://www.bloomberg.com/apps/news?pid=20601087′>http://www.bloomberg.com/apps/news?pid=20601087
Amazing what Public television can do.
October 21st, 2009 at 7:16 pm
so big bad obama is going to limit the pay of the 25 top executives. BFD. this is nothing but platitudes aka bread and circuses for the masses to shut them up for another day. how about a tiered structure that hits every bonus paid since these entites would be getting nada if not for you and me?
October 21st, 2009 at 7:32 pm
It is still October, last i checked. . . . HW is gone Capi after all that blustering, and some noted bears tried to go long. . . plus BR is showing his thoughts (again, read between the lines folks) without overtly posting SELL LONGS NOW. hmmm. . . interesting day. As i said a while ago, not much upside left, get cash and get safe. I sold some longs today again. I’m sure the people driving this bus up off a cliff will make me look like a fool again short term, but who knows. I only trade what i see, and i would rather not be exposed to the risk i see currently.
October 21st, 2009 at 8:41 pm
The Magnificent 7 will be crying the blues that they’ll be at a competitive disadvantage not being able to pay their creme de la creme fairly, actually GM & C don’t matter anymore. (I’m surprised WFC isn’t on the list). CITI and BAC would have to sell off big chunks of their businesses to pay off the gov and resume the bonuses.They’re more likely to be asking for more than paying off. Lets see how much Ken Lewis takes out the door, won’t compare to Stan O’Neals looting of ML I bet.
October 21st, 2009 at 8:44 pm
Why aren’t the banks foreclosing? One wag speculated it was because the banks already passed the paper for these homes onto Fannie & Freddie already. Thats a nice thought.
http://www.daytondailynews.com/news/dayton-news/drop-in-foreclosures-called-very-scary-352689.html
October 21st, 2009 at 9:04 pm
“Monetary policy must not neglect asset-price movements,” he writes. “Therefore it is urgent that China shifts from a loose monetary policy stance to a neutral one.”
http://www.ft.com/cms/s/0/e33078cc-be6c-11de-b4ab-00144feab49a.html?ftcamp=rss
October 21st, 2009 at 9:05 pm
I always thought the US would create a superagency to take foreclosures off the banks hands but maybe it’s already happened in a backdoor way. The banks reso;d the mortgages to the US and now they don’t have any principal at risk, just admin fees – not worth the bother.
(from another blog) An interesting issue has come up with regard to MBS. The Dayton Daily News reports that bank foreclosures have stopped. No, there are more and more homes in default, the banks have just stopped processing foreclosures.
What has happened? The banks sold all the paper to the greater fool a long time ago. Do the banks even have any interest in processing foreclosures since the paper is now owned by the government?
Will it be politically possible for the fed to foreclose on Fannie, Freddie, Ginnie, FHA debt? I see all the paper that the fed holds as garbage. Or the fed has to inflate the crap out of the currency?
…Banks not processing forclosures on government owned paper is the pentultimate “screw you”. One could surmise that the FHA becomes a much bigger entity and “services” what foreclosures it can– even for Fannie, Freddie & Ginnie. But yeah, MBS is only worth as much as the mortgages from which its derived.
October 22nd, 2009 at 1:32 am
posted this on another thread:
New toy for gold traders. Now you can see when gold moves are due to the gold market and when they are due to the US$ malaise.
Today it is the dollar’s fault:
http://www.kitco.com/kitco-gold-index.html#RT
Thought provoking article from Farrell:
Death of ‘Soul of Capitalism:’ Bogle, Faber, Moore
20 reasons America has lost its soul and collapse is inevitable