Will Morgan Stanley Forgive and Forget? Don't Count On It!

There's a great article on the front page of today's Wall Street Journal titled "Anatomy of the Morgan Stanley Panic." Click here to read the article (subscription required), and if you don't have online access, we'd recommend picking up a print copy. The article takes readers inside what was going on at Morgan Stanley (MS) during its free fall in mid-September and who was betting against the firm. It's fascinating to read about the hedge funds who pulled their funds from Morgan's prime brokerage and subsequently shorted the stock or drove up its CDS prices. Wall Street is definitely a dog eat dog world.

Trading records reviewed by The Wall Street Journal now provide a partial answer. It turns out that some of the biggest names on Wall Street -- Merrill Lynch & Co., Citigroup Inc., Deutsche Bank and UBS AG -- were placing large bets against Morgan Stanley, the records indicate. They did so using complicated financial instruments called credit-default swaps, a form of insurance against losses on loans and bonds.

Below is a table constructed by the Journal of some of the bets that Morgan's competitors made on 9/17 and 9/18. While Morgan has surely made similar bets against its competitors, rest assured that the company won't forget this article for a long, long time.

Comments

[Ishortyou:]

yup they are canibalizing themselves in Wall Street by shorting the stock and making money out of the CDS market, this will continue untill regulation and clearing house in the CDS market starts kicking in, in the meantime enjoy the show.

2008 Nov 24 01:54 PM

[tipalia:]

yes we should all get out of this canine, greed, selfish, corruption world.

2008 Nov 25 01:58 PM