Tuesday, March 31, 2009

Daba - Daba - Da...

Today, the Balcony would like to pay homage to one of our inspirational mentors and subject of our first post ever. Hey girls, a deal is a deal. Ain't it?

Monday, March 30, 2009

Paint it Black

Brazil's President Lula Da Silva offered yesterday his own unique explanation for the world's messy situation. According to Mr. Da Silva "this crisis was caused by the irrational behavior of white people with blue eyes"!!! He went on to explain how he reached that conclusion by saying that he is "not acquainted with a single black banker". How about any black politicians?

By the same logic, would I be justified to say that the doping epidemic in the world of sprinters is caused by the irrational behavior of black people with supersized muscles?


Eli Lilly to continue schizophrenia drug program. No real news here; given the state of the world we are living in, if it were up to me I would make it the top priority project . What's way more interesting is the rationale behind the decision. They are calling their trial studies "inconclusive" although the drug was no more effective than placebo (i.e. the generally accepted definition of a useless drug). The reason? Get this: "the unusually high response rate from patients taking placebo"!!! In a brilliant marketing move, by making this announement, the company has managed to increase the potential users of the drug when it finally gets approved.

Ponzi for Dummies

We all immediately sensed it was the largest Pyramid since Pharaoh Cheops but now thanks to Oliver's brilliant description we know exactly how it will work (please refer to the middle of the page, RE: Mr. Geithner's new bailout plan). As in all major schemes in the history the profit potential is just irresistible.

Wednesday, March 25, 2009

Who the man?

Ok. Go ahead and read this. Then read the date on the article. Then read that date again. Read the comment of senator Dorgan about how all this is a bad idea.

''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,''

Read that fucking date again.

Tuesday, March 24, 2009

Nothing Is Forever

He must be crunching his teeth in anger.

Stronger than Ever

So the big news of the day, and certainly the one that everyone is going to be talking about for the next 30 seconds or so is that Goldman Sachs is returning the TARP money, all 10bn of it.

So i guess the general idea is that they are doing ok, and they don't need it, and they have other pressing issues to attend to, say like, finalizing their bonus structure and the pay raises for 2009. Good. Now i was never that good at math but i seem to recall that they did manage to get more than that (NYTimes say 13bn) through AIG’s TARP money so i guess they are good to go.

If we are to believe C.Gasparino, then this is like, the head of the mob family returning back to the helm after a short stay in the hospital from that murder attempt at the local restaurant.

You Thrill Me

Meanwhile, the markets were thrilled by Geithner's plan. PIMCO already announced their intention to participate "attracted by the potential double-digit returns". You have to wonder, won't these people ever learn?

Of course there is another way of looking at yesterday's announcements. The world's largest Ponzi scheme that is Wall Street, just got an order of magnitude larger by its latest entrant, the US Treasury. By now, we all know how pyramids work. A new entrant means that earlier ones can redeem their money and be made whole. Yeah, that thought would be enough to justify a 7% rally in the S&P yesterday (not quite double-digit but still)...

This is how we do it

We now take a small commercial break from the world of high finance (and high losses presumably) to demonstrate the capability to game the system in other non related areas.

Stephen Colbert is the bomb

Monday, March 23, 2009

It's Time for the Experts

Let's try to put in simple terms the Obama plan for getting us out of this mess: The government will provide financing to private investors who are willing to buy the toxic assets from the various banks. In other words, we are being told that they have decided to turn the US economy into the largest Ponzi scheme in human history (the mama Ponzi so to speak). I agree that these are desperate times requiring desperate measures. But why stop there? I suggest we call the real expert to lead this effort. Let's give Bernie a literal bailout and make him the next Treasury Secretary. He is, after all, the only one who has proven he knows how to run this thing.

The solution

Obviously some ideas were already being tossed around to see if we could find a way to repay that massive kazillion debt load on Lehman, but who knew that the solution was just there starring at us…?.?

Saturday, March 21, 2009

Mot du jour

Not much to say here really, just some more clever uses of everybody's favourite word Ponzi. In case you missed it we are always on the lookout for something like this (see here).

U.S. regulator probing "rampant Ponzimonium"

Friday, March 20, 2009

The Hardest Job on Earth

In the meantime, my assumption is that AIG sales have come to a complete halt over the past couple of weeks. Because it is very hard for me to imagine that there is even one AIG salesperson able to go out and pitch, let alone sell a single policy
under these circumstances. Do I need to say what this means for the rest of us? Well you guessed it. By the time Q1 results are announced, we better have bailout package #3 ready and gift-wrapped.

When Words Fail Us

We know that the Balcony's promise is smart comments about unbelievable stories. But sometimes we just come up short. The story itself is so strong that any comment won't do it justice.

So here it is mot-a-mot from today's NYTimes:
A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do.

Enough Is Enough!

This is outrageous and it just has to stop! We need to draw a line somewhere and the Congress will show the way once again. Reportedly, they are getting ready to pass a Bill allowing Congressmen to spend up to 90% of the year in the executive suites of the companies receiving bailout funds, while executives can only be there the remaining 10% of time. The proposed legislation is widely expected to calm the growing taxpayers' outrage over yet another sign of corporate greed.

Not What We Had in Mind

So close and yet so far away... Ed had to be shelfish and not take the deal. So now we are looking at 90% instead of 50%! And EVERYBODY, not just AIG, get to return their bonuses!!! Which probably makes Ed the most hated man in Wall Street right now (clearly above Bernie who is just the most hated man in Geneva). The irony of it all? Most likely he won't be able to avoid physical harm anyway. Cause I am sure that at some point over the next few months, in a country club somewhere, some Managing Director will see Ed, grab a traditional japanese sword (steak knife rather) and show him exactly how he feels about having to return 90% of his bonus.

Thursday, March 19, 2009

Closing on a Deal

OK, he is offering to return 50% of the bonuses. That's clearly a good first step. Now if he was willing to accept a somewhat serious, self-inflicted wound by a traditional japanese sword, I am sure the Senate would seriously consider the compromise. So, on behalf of all involved, I am pleading to Mr. Liddy: Ed, take one for the team, so that we can leave this ugliness behind us and move on.

The great game era

ooooh yeah. The perfect little time-waster at the cubicle.

Notice how the bankers can’t loose on this game

Wednesday, March 18, 2009

It's Happening (II)

I am seriously considering giving out awards to anyone that can send to the Balcony an idea so absurd that is not already happening...

We learn today that, exactly as we proposed yesterday, AIG is already paying bonuses to other Bank's employees!!! Of course, it is only appropriate that it starts from its own alumni.

"When reality beats everything else" indeed...

Tuesday, March 17, 2009

Quote of the Day II

US Senator Charles Grassley on AIG executive directors.

"The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide,"

Or maybe do a little caraoke

UPDATE: Or maybe do a little chicken dance

It's Happening!!

By no means do we claim to have clairvoyant powers here at the Balcony, but simple logic application can make us look as if we do sometimes...

Just hours after posting our Bonus Consolidation concept, this just came in from today's NYTimes! If we understand the situation correctly, the absence of bonuses (along wih some questionable investment decisions) has led many GS employees to serious liquidity shortages, and the Bank is now offering them loans that will allow them to maintain their previous lifestyles (we shall refrain from making any judgements). To my mind these loans clearly fall under the subprime category, and we all know what happens eventually to the subprime lenders: Bailouts!!! So if the government is willing to subsidize loan related losses but not bonus payments, it should not have taken more than 5 minutes to the guys at the Goldman structuring desk to spot the arbitrage and come up with the appropriate structure...

Making Sense of the Chaos

What may seem as a series of random chaotic moves to the untrained eye, is indeed a well orchestrated plan to put some order to the chaos. Here is what we know so far:
1. AIG has achieved a unique status with the US government (we shall call it Bailout Consolidator), by which it can secure multiple mega-bailout packages on request.
2. Most of the funds are subsequently channeled to major financial institutions (GS, SocGen etc.) thus sparing the government the administrative nightmare of having to deal with multiple individual bailouts presumably on a weekly basis.
3. A non-negligible part of the funds is used to pay bonuses to AIG employees presumably for the market consolidation services they are providing.

The next logical step is obvious. In the name of fair competition, part of AIG’s next bailout package will be used to pay the bonuses of every single Wall Street employee removing the one major obstacle for the proper functioning of the credit markets, while further elevating the company’s status to Bailout/Bonus Consolidator.

The times, they are a-changing.

Bob Dylan was singing the tunes of his times against the evil of his times, and the people were taking to the streets in protest, but those times are now changing and we need some new icons to bring us up to date.

Welcome to the new era.

Monday, March 16, 2009

Pure Genious (II)


They said that he is probably the most talented politician Washington has seen in a very long time. Now we know why. He spent the first two months of his presidency talking down the economy with an unprecedented vengeance repeatedly using words like "crisis", "mortal danger of absolute collapse", "disaster", "catastrophie", etc. His strategy has become clear: He wanted to make sure that any sense of optimism has been eliminated (with the possible exception of V. Pandit), and ultimate gloom has captured our collective thinking, so that he can be 100% accurate when he says that "things are not as bad as we think"!!

On a scale of 1-10, exactly how bad would that be, Mr. President? -1,000,000 give or take?


Let’s recap last night’s meeting notes

Let’s follow up last night kickoff note about AIG and the bonuses being paid out to those people who significantly contributed to those records results (just two weeks ago, but hey at my age i tend to forget those details).

We ‘ve been working overtime over here this weekend to try and see how we can spin this story so that people forget about this shit and focus the real problems, like how much more money you should give us to find new ways to spend.

Our PR guys assure us that the only way to circumvent a crisis is with a far bigger one. So let’s release these lists of counterparties (basically this shows you where your money is going, hint: GS, SocGen etc).

Crisis averted. No how much do we owe our PR firm?

Sunday, March 15, 2009

AIG doing its thing

OK. I have to think of something to say, but really there are so many quotable lines over the internet right now coming from Cuomo, Frank, Summers et al that i am thinking i should just pace myself. This is obviously going to kickstart another round of hilarity so i am just going to sit back and enjoy the show.

It's so obvious that by now everything goes, it's just game on all around.

Read here and here or just google your ass.

Friday, March 13, 2009


In the news category under the general name "what could have possibly tipped him off?", we learn today that former St. Louis Federal Reserve Bank President William Poole thinks that "federal authorities seem not to have a clue as to what our financial course is or should be". Such an insightful comment of course was bound to have its consequences. So now the Chinese premier who has had no problem whatsoever lending to the US $1.95 trillion so far, has confessed that he has become "a little bit worried about the security of their assets".

A Madoff and Two Stanfords

Now hold on a minute. OK i understand that today was a news day, and that people were glue to the TVs watching the guilty plea and more importantly what he wore, what car he drove, if he was wearing his rings and some were even disappointed we didn’t have a white Bronco style chase. But i never flipped the switch on my TV, never. I‘ve followed this from the beginning. How did i miss that this thing just got from 50b to 65b?

Thursday, March 12, 2009

Life imitating art

As always Hollywood is the place that extreme scenarios are put together and the rest of the world is trying to catch up. Thousands of our readers remember the apocalyptic scenario of financial catastrophe as described in the movie Fight Club. Clearly it seems to be materializing. In an interesting twist, the rest of the movie is also coming to life.

And in another twist of this ever ending circle, art will try once again to imitate life.

You Win Some, You Lose Some

B.M.W. (the car maker, not the arsonist movement from a previous post), got some sobering news today, that could potentially dampen the elation felt throughout the company from the milestone legal victory they got earlier this week.

Things Look Even Worse From the Outside

Thank God that Pres. Obama chose T. Geithner over T. Friedman as his C.B.O. (Chief Bailout Officer), thus allowing the Nobel laurate to think things over and go from overly concerned in late January to borderline Apocalyptic in early March...

Wednesday, March 11, 2009

Pure Genious

The theory that a 70-year old man was single-handedly preparing, on a monthly basis, thousands of fake customer reports, detailing countless fictional trades that were actually adding up and could stand up to the scrutiny of their receipients (including all major international banks) seemed entirely plausible to all of us from day 1. Nonetheless, it appears now that US prosecutors are having second thoughts and are entertaining the idea that some of the Fund's employees might have actually participated in the fraud! We are left wondering what or who could have possibly tipped them off...

Tuesday, March 10, 2009

Relatively Speaking

High-frequency trading, a trading technique that uses computer programs to buy and sell securities for time periods as short as 10 minutes, is apparently the next big thing in the Hedge Fund world and such traders are currently the most sought-after professionals. Traditional day-traders however, dismiss the high-frequency trading as "too speculative" and insist that best returns can be achieved only with "a long-term view on one's trading positions".

Things Are Looking Up

V. Pandit announced today that Citi is having its best quarter since 2007 when it last posted a profit, thus becoming the leading candidate for the 2009 "Seeing the Glass Half-Full" award. The news sparked an enthusiastic 15% pre-trading rally of the company's shares, while analysts are expecting to see new all-time highs before year end 2129.

Who will insure the insurer (AIG) ?

Obviously, just reading the title of this article doesn’t make you feel warm and cuddly but still you have to listen to this guy.

In the same time the AIG PR machine is working overtime in order to convince the government to shell out some more cash, so here’s another interesting memo giving some details in the size of the problem.

Some obviously interesting numbers all around but especially page 17. If you can’t get your head to think in numbers over 12 digits long, just jump over to the conclusion for the happy oxygenated bullet point ending.

Just When You Thought They Had Everything

Perfect gift idea for your recently (or soon to be) laid off banker friends.

Monday, March 9, 2009

Regular Irregularities

In what has now become a normal reporting procedure, Merril issued on Friday its "Regular Irregularities and Discrepancies Report". In an effort to drastically reduce the administrative workload of the Regulatory Authorities, in such a hectic period for them, the Bank has announced that going forward, they will only notify them if and when they discover a trading position without any irregularities and/or discrepancies.

Saturday, March 7, 2009

Riiiiiiiiight, now you're talking.

I mean i am not by any means an avid reader of the economist, but when they say things like this, then you gotta sit up and listen. That is if you are not high on something...

Friday, March 6, 2009


Wow, just wow. Not much to say here but just the title of the article…

One in 8 homeowners late paying or in foreclosure!

U.S. February Job Losses May Have Been Largest in Six Decades

Now move along, nothing to see here.

Heeeeeeere’s Johnny!

We got to vote, and elect our presidents and our governments so that they can fix this mess. That plan didn’t work out so far. So our elected official decided to bring in the big guns.

Now i know that we are not gonna be asked to take part in this exercice, or vote on who gets to help out or something but how about we do it reality TV style, THE BAILOUT KING or something were we get to sms who should own these companies based on their pocket depths, the ability to sing in the bathroom, or a few rounds of corporate style team building games…

Thursday, March 5, 2009

Fantasy Football

UEFA, the European football governing body, is considering introducing this coming fall an all new pan-European football competition: the Bailout Cup. A number of major clubs have already confirmed their participation (Manchester United, Newcastle United, Werder Bremen, Anderlecht, and Feyenoord), whereas many more are expected to join by September. The idea has gained such popularity that several countries including Poland and Hungary are prepared to suspend their national leagues to allow their teams to take full benefit of the new Cup. Ford, who is getting ready to terminate its longstanding Champions League sponsorship is among the frontrunners to become the new Cup's Sponsor.

Tuesday, March 3, 2009

Quote of the Day “”

Ralph Janvey, appointed receiver on the Stanford Ponzi Extravaganza

"There is a liquidity crisis in this company,"

You think?

Cost Cutting

Restaurants are doing their best to cut costs and financially accomodate their clients. In case the recession worsens and further cuts are required, could I suggest droping Japan Airlines and taking advantage of Ryanair's low basic ticket prices, since the extra charged services are not likely to be used?

Investors' Far West

After years of greed-driven "Hedge Fund-Palooza", it was only natural to move to the fear-driven "Ponzi-Palooza". What's next? Tar and feathers for poor old Bernie?