28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 27AUG09:
Mini Crash 21SEP09 Predicted correctly:
Bailout=Bonuses
Demise of Bear Stearns
Demise of Lehman Bros.
Demise of AIG
Subprime would cause problems
Date of 2007 crash
CRAs were to blame
G20 riots were a party
Northern Rock run
Northern Rock Nationalization
HBOS and RBS demise
UBS really was Useless
Goldman makes a profit but based on pre Lehman alt-a prices as did Morgan Stanley who hid under the bad news radar. They must be relieved that AIG is now owned 80% by the US taxpayer, as another USD85bn debt is added to the US balance sheet. If AIG had gone the way of Lehman, their alt-a and prime debt prices would have been discovered and Goldman and Stanley would too be on the list of "next to die".
Of course this quarter they need to get some real profits out there because I don't think Paulson has an appetite for saving anything else. The US taxpayer is quite forgiving but this is all getting very silly. Thankfully that other debt bucket, Barclays, has managed to do a Bank of America and get very big and so move into the "we are too big to die" category of banks by acquiring on the cheap a lot of Lehman assets. Never heard of Barclays Capital? Suddenly it is being propelled into the premiership. Good move Bobby Geezer. The repercussions of an AIG death were too horrific to contemplate. We spotted that AIG FP were in trouble early this year and again we were proved right. As a smart hedgie, I am never wrong. [Editor: delusions of grandeur are the first signs of insanity].
So what next?
HBOS and RBS in the UK are in danger of following suit and need all the help they can get. The upshot is capitalism is on the brink of failure due to the wrong type of regulation being imposed in the past. Accounting Standards need to reviewed immediately and banks should issue 2 sets of financial accounts. A book based one and a marked to market one so we could see what it would look like if the bank had to liquidate tomorrow. That way we could all see the true risks. Banks are so opaque it is crazy.
And all this time us hedgies were being blamed. Without us providing liquidity to a market with very low volumes (especially since Lehman are now gone), the markets would be doing a 1929.
And what is so pleasing is the markets haven't really tanked. Which is nice.
Investment Banking is dead. Time to become an artist. Damian Hirst isn't doing too bad is he?
AIG GETS UP TO $85 BILLION LOAN FROM FED AS U.S. TAKES CONTROL
The Federal Reserve Board, with support of the U.S. Treasury, invoked emergency powers to lend up to $85 billion to American International Group Inc. to save the firm from collapse.
``The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance,'' the Fed said on a day when it left the benchmark lending rate unchanged at 2 percent.
Fintag says I told you so.
BARCLAYS TO UP HEADCOUNT AND STANDINGS VIA LEHMAN BUY
The purchase of Lehman Brothers' broker-dealer operations could increase Barclays Capital's headcount by 55% and propel the investment banking arm of the UK bank into the top 10 league table positions across all investment banking businesses.
Barclays Capital had already been growing this past year, especially its Americas team, through gradual hiring. As of June 30, the firm had a global headcount of about 16,300.
Fintag says A very astute move by Bob Diamond.
bloomberg says " Barclays to Buy Lehman U.S. Units for $1.75 Billion "
By the final fall of the gavel at Sotheby's sale of new works by Damien Hirst yesterday, the world's richest artist (reportedly worth more than $1 billion), was $172 million richer. That was the amount left from the $201 million total after subtracting Sotheby's commission and $6.2 million of charitable donations. But perhaps more important, Mr. Hirst was also comfortable in the knowledge he had made history.
Not only was it the largest single artist sale ever held, with 287 lots; it was a sale that courageously flouted the time-honored tradition in which galleries have had sole lien on the sale of an artist's latest works.
Fintag says Imagine that. Selling people crap and making hundreds of millions. Damien Hirst should have been an Investment Banker.
OK, got it cracked. Don't be a shareholder, or a preferred shareholder, or even a creditor or a policyholder. Just be a counterparty to a sleazy derivatives bucket shop — AIG Financial Products, to pick a name at random — and your chips, with applicable profits, will be returned no questions asked. The bailout is not of AIG, or its shareholders, or even its policyholders; the principal beneficiaries of this action are the members of the International Swaps and Derivatives Association (ISDA) including, without limitation, Global MegaBankDrekk NA and its wholly-owned subsidiaries.
Fintag says The headlines never appear to be what they seem.
A hedge-fund swindler accused of faking his own death is not yet competent to enter his long-expected guilty plea for skipping out on a 20-year prison term, his attorney said Tuesday.
A federal judge postponed Samuel Israel III's hearing until Oct. 22 after defense lawyer Barry Bohrer told him drug therapy is affecting Israel's "ability to perceive and actively understand what's going on."
Fintag says I think a few Merrill, BoA and Lehman bankers will soon need to adopt this approach. I note the first class action against Merrills went in yesterday and I am sure more will follow against the other culprits including AIG.
So Dick "Don't call me Fcuk" Fuld is having a nervous breakdown? Nice.
Of course for those under 30 who have never witnessed a proper bear market, this is all quite frightening. And it is. For those under 70, this is the most extraordinary stuff since the oil crisis of the 1970's when the UK was bailed out by the IMF.
But it will pass. The spot has been squeezed and the puss will dry up.
DARLING FACES CALL FOR SHORT-SELLING CRACKDOWN AFTER HBOS PLUNGE
Alistair Darling stopped short of calling for an outright ban on shorting bank shares yesterday, as news emerged that the US government was preparing plans to crack down on the practice.
This came on the day that the Liberal Democrat Treasury spokesman, Vince Cable, called for the regulators to outlaw the shorting of banks to stop hedge funds "betting against the taxpayer".
The knives are out once more for the short sellers, a strategy predominantly carried out by the hedge fund industry, designed to profit from a decline in a company's share price.
Fintag says Darling. The hero of our times.
HEDGE FUNDS' GROWTH PROSPECTS HIT BY LEHMAN'S DEMISE
The future growth prospects for the almost $2,000bn global hedge fund market are in doubt as funds are being forced to de-lever and sit on large cash balances as a result of the severe pressure on the prime brokers they largely depend on for financing.
The collapse of Bear Stearns and Lehman Brothers has forced hundreds of hedge funds that used them as their prime brokers to look elsewhere for their funding and operational support but also put pressure on funds to rein in the amount of leverage they employ, thereby limiting their ability to outperform broader indices and causing investors to question the fees they charge.
About 100 hedge funds that used Lehman Brothers as their prime broker had positions held via the failed bank frozen on Monday as administrators took charge of the London business and the US holding company filed for bankruptcy.
Fintag says But we are fighters who don't need to be bailed out by governments or tax payers. This is why hedge funds will become the new investment banks.
The contrariety view: financial news says " Comment: Lehman and Merrill woes are great news for big hedge funds "
INFLATION AT A 16-YEAR HIGH SHOULD HAVE BEEN THE NEWS OF DAY
n normal circumstances, the revelation that inflation rose to 4.7% last month would have been the news of the day. No question, the fact that Mervyn King had been forced to write a letter to Alistair Darling explaining why the cost of living was running at almost two and a half times the government's 2% target would have had the City abuzz.
These, though, are clearly not normal times. The global financial markets are one gigantic car crash and traders have other things on their minds. Whether they will still have a job at the end of the week, for example. So while today's data from the Office for National Statistics was important, it had far less impact on the markets than the big jump in July that was announced last month.
Fintag says So the Fed kept interest rates at 2% and the Bank of England is also constrained by that evil thing inflation.
With just two large investment banks remaining - Morgan Stanley and Goldman Sachs - questions are growing over who might step into the suddenly emptier playing field.
Many Wall Street watchers are pointing to the looming presence of large hedge funds and private-equity firms, which have been stealthily encroaching on many of Wall Street's traditional lines of business for years now.
"I think the new Wall Street is not going to be on Wall Street," said Ferenc Sanderson, a hedge fund researcher at Thomson Reuters. "The headquarters of Citadel is in Chicago," he said.
Fintag says Have I lived before? I don't want to sound arrogant [Editor: You always do] but I have been saying this for months.
fintag OCTOBER 2007 says " Hedge funds are the new Investment Banks - but without the overheads "
The two largest U.S. investment banks, Goldman Sachs Group Inc and Morgan Stanley, reported lower quarterly profits, but beat expectations on Tuesday even as the worst market slump in decades rattled Wall Street.
Goldman Sachs, the largest securities firm, said third quarter earnings fell 70 percent on weaker-than-expected revenues, knocking its shares to nearly three-year lows.
Later, No. 2 Morgan Stanley, which reported a day ahead of schedule after U.S. markets closed, trounced expectations paced by one-time gains, robust equity and commodities trading results and record prime brokerage fees.
Fintag says I don't get it. Check out this slide from CNBC. Goldman should be bust but because they are pricing crap prime at 60 cents instead of the Lehman 30 odd cents they have escaped for another 3 months or so:
financial news says " Goldman defends independent model as profits drop 71% "
IS HALIFAX NEXT? CRUNCH TIME AS BRITAIN'S BIGGEST MORTGAGE LEADER LOSES A THIRD OF ITS VALUE IN 48 HOURS
Britain's biggest mortgage lender has suffered another catastrophic day on the stock market.
Shares in HBOS, owner of the Halifax, dropped 40 per cent before staging a partial recovery.
The bank has lost a third of its value in 48 hours amid fears that it will be the next victim of the credit crunch.
Fintag says Again, we predicted their downfall exactly 12 months ago.
Barclays have escaped via Lehman but the rest are in serious trouble [Editor: No financial advice allowed].
34 comments
anonymous said ...
Fintag, I have signalled your website to the FSA as some stuff you post here is completely unfunded, damaging and smacks of rumor, especially the bit about Goldman that should be bust. Unfortunately your blog has gone from good to bad, the content is now very arrogant and quite repetitive. Time for a change.
17 Sep 08 - 07:14 gmt
FSA snitch said ...
cry baby cry all the way to mummy
17 Sep 08 - 07:20 gmt
Finbar said ...
Yes it is true. I need to be taken away to somewhere dark and peaceful. When I said Goldman was bust, I meant it was best. Typo, sorry …
17 Sep 08 - 07:28 gmt
Geek said ...
@anonymous -why do you bother reading it then? The FSA have got better things to do like saving HBOS. I think you will find this site is based on US servers so its out of the FSA's jurisdication anyway.
17 Sep 08 - 07:37 gmt
GalwayBoy said ...
Its a well known fact that psychos are encouraged to use the t'internet and to post on blogs and message boards as therapy. Take no notice Fin. I suspect he's the same "anonymous" that is obsessed by GLG.
Having said that Alan Miller formerly of New Star and an expensive divorce is in hot water for something similar at the moment.
17 Sep 08 - 08:33 gmt
anonymous said ...
Putting views up for scrutiny will (hopefully) attract views and scrutiny. Good work Finbar - keep it up
17 Sep 08 - 08:41 gmt
Reptile said ...
This is a loser's blog run by a 25k back-office bloke in a "small boutique niche" hedge fund
17 Sep 08 - 08:59 gmt
anonymous said ...
It's the unfounded damaging rumour which makes this worth reading!
17 Sep 08 - 08:59 gmt
anonymous said ...
Its refreshing to hear the comments from all parties - no matter how bullish or bearish
17 Sep 08 - 09:04 gmt
anonymous said ...
Unfortunately Finbar is factually incorrect -- GS valuing Alt-A at 50c vs 39 c LEH. They are valuing their prime CMBS at 80c vs 85c LEH.
17 Sep 08 - 09:04 gmt
MsR said ...
Oh Reptile...in your dreams. I can assure you Fin is not a 25,000 a year loser. A cynic, most certainly. But what is there not to be cynical about. As for his 'damaging' rumours, any punter can read similar (though not as amusing) concerns online and in newspapers today.
Blogs are wonderful because they are so hard to touch. Ask the big political bloggers who get away with much, much more.
17 Sep 08 - 09:07 gmt
Alpha60 said ...
If HF and PE houses are the new I-banks, should we be expecting consolidation in that sector?
17 Sep 08 - 09:07 gmt
Shane Warne said ...
I must say Fintag, I'd hoped your Kabala retreat would see you come back renewed. I've lost faith in the site and read it occasionally now....even the jokes are the same. The insight has gone, thus making it like the others.
I'm sure you've got better things to do so better to go out whilst they still love you.............
17 Sep 08 - 09:09 gmt
anonymous said ...
it's not cool to justify a bullish or bearish view by disseminating false information
17 Sep 08 - 09:12 gmt
MacroHedgeBoy said ...
Who was that first post from? What are fecking loser. I also have sort of a GLG obsession (....it's just like a car crash) but I'm not anonymous. Whats the new Star fella up to now? hadnt seen that
17 Sep 08 - 09:20 gmt
GalwayBoy said ...
Miller has been accused by engineering company Pursuit Dynamics of making defamatory comments on online bulletin boards.
Pursuit Dynamics reportedly won a court injunction forcing ADVFN.com to divulge the user’s identity; the account has apparently been linked to Miller
17 Sep 08 - 09:37 gmt
anonymous said ...
Can't prove if these comments are defamatory or not. To do that Goldman's et al would have to disclose stuff they don't want to disclose...and it might prove they are not defamatory...
17 Sep 08 - 09:44 gmt
MacroHedgeBoy said ...
Good god...! He's one lucky fella...not. Well, if that's the way the world is going then Fin might as well shut up shop, which would be good news for the 25k small boutique niche thingy
17 Sep 08 - 09:52 gmt
GalwayBoy said ...
One knock on effect that will have some hedgies wincing is that Lehman had over $5bn invested in hedge funds through structured notes which may have to be unwound possibly triggering more redemptions
17 Sep 08 - 09:57 gmt
Alpha60 said ...
Some big shorts going in for HBOS...looks like the Mayfair brigade know something!
17 Sep 08 - 10:25 gmt
GalwayBoy said ...
That would be the Lloyds TSB merger rumour
17 Sep 08 - 10:51 gmt
anonymous said ...
My, my, some of us are a little testy this morning. Something happen to our portfolios?
17 Sep 08 - 11:14 gmt
Moron said ...
Dont worry guys just keep shorting
17 Sep 08 - 11:21 gmt
GalwayBoy said ...
Short Russian financials. Their exchanges have locked up again for the second consecutive day.
17 Sep 08 - 11:48 gmt
finbar said ...
Did I really write this guff at 6am this morning? Thankfully I have a few confirmations to process while I work out how to make this blog more relevant.
17 Sep 08 - 12:20 gmt
GalwayBoy said ...
Don't you just love performance chasing churning fund of hedge fund bandits. The only good news to come from the recent turmoil is that they are getting absolutely slaughtered at the moment.
17 Sep 08 - 12:59 gmt
Alpha60 said ...
So Fin is a humble confirmations analyst LOL ( as exposed by reptile )
How do u go about pulling the russian ice queens of south ken ( as per previous posts)...whats your secret..LOL
17 Sep 08 - 13:12 gmt
Puzzled said ...
Am I crazy or is 79.9% equity and $85billion at L+850 not a pretty good trade for the Fed? You effectively get the worlds largest insurance company and only have to pay the actual losses from AIGFP. Even at $100bio, AIG insurance company is probably worth it. Bernanke is now running a distressed fund. Finbar was right that hedge funds are the new ibanks.
17 Sep 08 - 14:55 gmt
Finbar said ...
I hope my dire predictions about Morgan and Goldman didnt trigger the current price dives [Editor: If only ...]
17 Sep 08 - 17:39 gmt
Moron said ...
Resist the temptation to bottomfish here this crash will extend well into october
17 Sep 08 - 19:46 gmt
anonymous said ...
Fin - don't listen to the knockers today (unless they are on a Russian woman). Most of us think you are doing a good job.
Oh - and first comment of the day anon - FSA won't listen to you today....they were doing their Asset Management conference at teh QEII centre
17 Sep 08 - 20:26 gmt
GP - Leaving his mark. said ...
i can't believe morgan is going down. goldman i can understand. but not morgan. this must be the end of investment banking. are we all out of work?
17 Sep 08 - 22:33 gmt
Moron said ...
Just keep shorting like there is no tomorrow this will eventually lead to a recovery but it will b an apology of a recovery equities in the developed world have been in a bear market since 2000
17 Sep 08 - 23:26 gmt
Gp said ...
so many people should be locked up. can we blame greenspan and even september the 11?
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