Tuesday, March 31, 2009
Monday, March 30, 2009
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.
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
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
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.
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)...
Monday, March 23, 2009
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.
Saturday, March 21, 2009
Friday, March 20, 2009
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.
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.
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.
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
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.
Wednesday, March 18, 2009
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
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
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...
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.
Monday, March 16, 2009
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 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
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.
Friday, March 13, 2009
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
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.
Wednesday, March 11, 2009
Tuesday, March 10, 2009
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.
Monday, March 9, 2009
Saturday, March 7, 2009
Friday, March 6, 2009
Wow, just wow. Not much to say here but just the title of the article…
Now move along, nothing to see here.
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…