williambanzai7

Where's the Bottom? Still Anybody's Guess

TO BAIL OR NOT TO BAIL
(Adapted from William Shakespeare's Hamlet)
(WilliamBanzai7)

To Bail, or not to Bail, that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous loss of fortune,
Or to take arms against a sea of financial troubles
And by opposing end them. To die—to sleep,
No more; and by a sleep to say we end
The heart-ache and the billion market shocks
That investor hubris is heir to: 'tis a consummation
Devoutly to be wish'd. To die, to sleep;
To sleep, perchance to dream—ay, there's the rub:
For in that sleep of death what dreams may come,
When we have shuffled off this market coil,
Must give us pause—there's the respect
That makes calamity of so long life.
For who would bear the whips and scorns of time,
The CEO banker's wrong, the proud man's contumely,
The pangs of write offs, the law's delay,
The insolence of office, and the spurns
That patient merit of th'unworthy takes,
When he himself might his quietus make
With a bare quill? Who would Federal oversight bear,
To grunt and sweat under an ordinary life,
But that the dread of something after death,
The undiscovere'd country, from whose bourn
No traveller returns, puzzles the will,
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all,
And thus the familiar hue of resolution trust
Is sicklied o'er with the pale cast of thought,
And enterprises of great pitch and moment
With this regard their currents turn awry
And lose the name of action.

The Bailout to End All Bailouts

CHARGE OF THE TARP BRIGADE

(Charge of the Light Brigade, Alfred Lord Tennyson)

(Modified by WilliamBanzai7)


Half a trillion, half a trillion,
Give or take 200 billion, onward!
All in the valley of Balance Sheet Death
Rode the seven hundred billion tax dollars.
"Forward, the TARP Brigade!"
"Charge for the ABS Credit Default Swaps!" Hank said:
Into the valley of Balance Sheet Death
Rode the seven hundred billion taxpayer dollars.


"Forward, the TARP Brigade!"
Was there a politician dismay'd?
Not tho' the Congress knew
Some guy named Hank had blunder'd:
Their's not to make reply,
Their's not to reason why,
Their's but to do and die:
Into the valley of Balance Sheet Death
Rode the seven hundred billion taxpayer dollars.


CDOs to right of them,
CDSs to left of them,
AIG and the GSEs in front of them
Volley'd and thunder'd;
Storm'd at with Wall Street shot and shell,
Boldly that load of Federal largesse rode and well,
Into the jaws of Balance Sheet Death,
Into the mouth of subprime contagion Hell
Rode the seven hundred billion taxpayer dollars.


Flash'd all the workout sabres bare,
Flash'd as they turn'd in air,
Sabring the asset backed losses there,
Charging an army of tawdry bankers, accountants, and shysters, while
All the world wonder'd:
Plunged in the seedy subprime-smoke
Right into the red numbers they broke;
Lehman and Bear Stearns
Spared from the sabre stroke
Shatter'd and sunder'd.
Then they rode back, but not
Not the seven hundred billion.


Subprime CDOs to right of them,
Subprime CDSs to left of them,
Fat Wall Street advisory fees behind them,
Volley'd and thunder'd;
Storm'd at with derivative losses, asset backed shot and shell,
While level 3 zeros fell,
They that had fought so well
Came thro' the jaws of Balance Sheet Death
Back from the mouth of subprime contagion Hell,
All that was left of it?
Nothing left of seven hundred billion buckaroos!


When can its glory fade?
O the wild loss charges!
All the world wondered.
Honor the huge expenditures they made,
Honor the TARP Brigade,
Noble seven hundred billion taxpayer dollars.


(TARP--Troubled Asset Relief Plan of 2008)


williambanzai7.blogspo.../

The Bailout to End All Bailouts

Ballad of Komrad Hank (Gorgy Busz's Kommerce Sekretary)
(Tune of Beverly Hillbillies)

Come and listen to a story about a fine komrad named Hank
A szwanky Goldman banker, who ably kept his partners fed,
Then one day he was laughin at some AIG fools,
And up through the ground came a toxic derivative krude.

CDSs that is, fools gold, Wall Street tea.

Well the first thing you know ol Hank buys billionz of CDOz n szhares,
Taxpayers said "Hank move away from here"
Said Zheleznodorozhny is the place you ought to be"
So he loaded up the junk and shipped it overseas (to Moscow that is).

Szwimming pools, Oligarchs , and everything.

Well now its time to say good by to Hank and all his bailout kin.
And they would like to thank you kapitalist fools fer kindly droppin in.
You're all invited back again to this socialist locality
To have a heapin helpin of state hospitality
Set a spell, Take your white shoes off.

Do swidania, y'hear?.
williambanzai7.blogspo.../

The Bailout to End All Bailouts

The Great Subprime “Babel”—A Modern Tale of Biblical Greed

By WilliamBanzai7

Wall Street never changes. The pockets change, the suckers change, the stocks change, but Wall Street never changes because human nature never changes. - Jesse Livermore

The public’s annual loss to Wall Street has usually been estimated in former years at $100,000,000 per annum, but owing to the more recent enterprising methods of the “Street” in manipulating the game, this estimate is now far to small as we shall see.-Franklin Keyes (1904)

Conceit of the Street

Shortly after the explosion of the great “dot.com” bubble something happened that was to change the monetary affairs of all men on Earth.
The investment banking tribes had once again begun to proliferate and fill the Street. They spoke a new tongue--the tongue of rampant financial innovation. It was a strange tongue with words like synthetic CDOs, conduiting, CLOs, SIVs, bespoke swaps, CDOs squared, negative default correlations, binomial expansions and stochastic modeling. A tongue curiously reminiscent of the tongue of the House of ENRON.

The generations of bankers before the “dot.com” bubble, were believers in the fundamental laws of securities valuation and diversification. They were believers in the book of Graham and Dodd.

But the new generation of investment bankers was different. They stressed an opposite code of investing. The smart investor did not count. Their game was a vast pyramid of derivatives and mortgage backed securities. Had they confined themselves to this kind of financial life in a modest fashion, all might have been well. But the obscene fee income made possible by cheap leverage, financial engineering and securitization techniques made them ever greedier and in their hubris they thought they could beat the financial laws of thermodynamics.

They decided to build a great Tower of mortgage backed securities. With the Tower they would pillage the housing markets and at the same time seemingly eliminate all risk for themselves. Heads we win, tails you lose; that was their credo. The symbol of their invincible wealth, as they thought, was to be built in the shadow of the House of Greenspan. It would be squeezed out of Joe Public who was long disdained and exploited by the Lords of the Street. This time they would build tempt Joe with reckless mortgage loans supported by an “irrationally exuberant” real estate market.

According to the Lords of the Street, a new paradigm had emerged: financial risk could be sliced and diced into oblivion, cheap leverage is here to stay and housing prices can only go up. Many foresaw the folly of this enterprise. Buffet, the great chief of the House of Berkshire Hathaway, called the new instruments of invincible wealth, financial weapons of mass destruction. But the aging House of Greenspan was oblivious to the great folly unfolding before its jaundiced eye. The unbelievers were admonished to stay in Nebraska where they belonged.


Their Punishment

Finally, the Market decided to punish the arrogance of the bankers by destroying the tower. First, it, confused them by splitting them up into many greedy tribes, each with a tongue and agenda of its own, (hence the name Babel, meaning “confusion”). A new tribe, the Shorts, arrived and the hunters soon became the hunted. Alas, they were forced to subjugate their vast pools of CDOs and CDSs to the divine force of the Market. This ultimate humiliation came to be known as the “great MTM slaughter.”

When this happened, the Tower had to be abandoned. The various bankers would migrate in different directions. Many were fired. Others headed West to the Valley of Silicon, no doubt dreaming of other Babels ripe for exploitation—nanotech, infotech, biotech and cleantech to name but a few .

The Tower itself was partly burned and partly swallowed by the great Houses of Morgan, Barclay’s and BOA. As for the Great Houses of Goldman and Morgan, they were forced to pledge themselves to the Fed, under the wise and benevolent protection of Gentle Ben, the new master of the House of Greenspan. He who would later come to be known as “Father Moral Hazard”.


(Adapted by WilliamBanzai7 from the Biblical story of the Tower of Babel)

The Bailout to End All Bailouts

2 Big 2 Fail = 2 Stupid 2 Survive

The Fed Giveth, the Fed Taketh Away

Bernanke's Big Rock Candy Mountains

(to the melody of Big Rock Candy Mountain)
Lyrics By WilliamBanzai7


One evening as the DOW went down and the ABX was burning
Down the track came a banker hiking and he said boys I'm not turning
I'm headin for a land that's far away from Wall Street's crystal towers
So come with me we'll go and see the Bernanke's Big Rock Candy Mountains

In Bernanke's Big Rock Candy Mountains there's a land that's fair and bright
Where the handouts grow from the Bush bailout pros and you sleep sound every night
Where the ABS books are all empty and the sun shines every day
On the birds and the bees and the bonus trees
Where the perrier springs where the squawk box sings
In the Bernanke's Big Rock Candy Mountains

In Bernanke's Big Rock Candy Mountains all the regulators have wooden legs
And the shorts all have rubber teeth and the taxpayers lay golden eggs
The traders books are full of fruit and the bankers play all day
Oh, I'm bound to go where there ain't no snow
Where the rain don't fall and the wind don't blow
In Bernanke's Big Rock Candy Mountains

In Bernanke's Big Rock Candy Mountains you never sell your stocks
And the glimmering streams of origination fees come a-trickling down the rocks
The enforcers have to tip their hats and the bears and shorts are banned
There's a lake of stew and of champagne too
You can sail all around 'em in your custom yachts
In Bernankies Big Rock Candy Mountains

In Bernanke's Rock Candy Mountains white collar jails are made of tin
And you can walk right out again as soon as you are in
There ain't no short handled shovels, no axes saws or picks
I'm a goin to stay where you sleep all day
Where they hung that jerk from Berkshire Hathaway
In Bernanke's Big Rock Candy Mountains

I'll see you all this coming fall in Bernanke's Big Rock Candy Mountains

Lessons From the Banking Meltdown

Wall Street, Bush, AAA Lawyers and the Demise of Accountability

We live in a time when political and business leaders are able to avoid being held accountable for their acts of gross negligence and wilful misconduct. Sounds like lawyer talk. Well lawyers are intricately involved in this sorry state of affairs. Lets take the Bush administration. What did all the Republican cronies like Cheney learn from the Nixon saga? Don't put yourself in weak position legally. Don't testify under oath, better yet don't testify. Don't provide information under threat of perjury and obstruction of justice, better yet don't provide information. They have artfully avoided political accountability for a litany of constitutional abuses, executive misconduct and malfeasance. They are also getting AAA legal advice.

OK, now lets consider what has happened in the financial services industry. Until recently, our securities laws forced Wall Street to worry about the way it conducts business. Don't play by regulatory rules with origins in Roosevelt's New Deal and sooner or later the SEC or Elliot Spitzer will hunt you down. You had to worry about adequate disclosure and a battery of rules designed to protect average public investors. If you misbehaved, you also had to worry about a ravinous plaintiff's bar charged with the duty of prosecuting claims on behalf of investors unable to fend for themselves (for a generous fee, of course). More AAA lawyers.

Those New Deal rules are still there. However, Wall Street has managed to water everything down to the point where a manmade Katrina hits the financial markets and there is little or no means to hold the perpetrators accountable. Don't hold your breath waiting for the SEC to chase the bankers that designed, peddled and later lied about their exposure to toxic jackass backed securities. What about Credit Default Swaps? Oh, those so called financial weapons of mass destruction are not securities within the meaning of the securities laws. Those are cutting edge risk management tools. How about investors like poor old AIG banding together to sue those who set them up with these improvised financial explosive devices. Never mind, those were sold to "sophisticated" and "accredited" investors able to fend for themselves. Sales to these financial sophisticates are not subject to the same legal regime. We now see that "sophisticated investor" means one who expects to be bailed out by Uncle Sam. Finally, you won't be seeing any widows and orphans starting class action suits, because no one sold them any securities. Instead, they are accused of being financially culpable in this mess because they fell prey to the army of mortgage/real estate brokers who aggressively peddled shadow bank loans. Mortgage brokers in some instances owned by who else? Wall Street investment banks like Lehman and Bear Stearns. Shadow bank loans? Yep, more AAA legal advice.

Let the markets regulate themselves! That is the fundamentalist mantra of the lords of the Street. Well, that is what the market was actually doing until this past Friday. Self regulation came in the surprising form of punishment by the shorts. After all, it was the unregulated hedge fund industry, Messrs Einhorn et al, and not the SEC that called Lehman and AIG to the carpet. Not to worry, Mr. Cox, a Wall Street lawyer who runs the SEC, has fixed the short problem for his former clients/masters. Trading bets against financial institutions are now banned. In a comic twist, the SEC is apparently planning to force hedge fund managers to testify under oath. Something more than you can expect from the likes of Harriet Myers, Esq. and Alberto Gonzalez, Esq. Ultimately, the reckless bets that the investment banks made with shareholder capital will go unpunished. Still more AAA legal advice.

Well you begin to see how what seems like one big scam is actually a legally airtight apparatus for screwing Grandma, Grandpa and Joe public in an indirect manner without being held legally accountable. Time to throw out all of the New Deal regulatory assumptions and start all over again. Wall Street, like the Bush administration, has managed to innovate its way out of corporate accountability-- the old fashioned way: hire innovative AAA lawyers. 

One hundred years ago a man named Franklin Keyes, Esq. (you guessed it, a Wall Street lawyer) published a tract titled: "Wall Street Speculation, Its Tricks and Its Tragedies". In it he says: "Wall Street is dominated by some of the brainiest and shrewdest men in the country, natural born sharpers and schemers, and before the average man can get the better of them, except through the merest chance, he will have to eat brain food for a long time." Well said Mr. Keyes. Nothing seems to have changed, particularly the need to hire AAA lawyers.

WilliamBanzai7
September 2008

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Money for nuttin and #&@T for free. Thats the Wall Street way.