Things aren't looking good...

If all the massive financials' writedowns weren't enough we saw the SPX go under its 200-day MACD. I think tomorrow could be really bad, and don't think a good unemployment number is going to save you (actually the only thing that could is some big boys covering shorts or going long if their trigger was the 200 MACD). Get out of FXI, short the SPDRS (and the dollar) and hold on to your golden balls.

Oh no they didn't!

Bloomberg delivers Jimmy Joint & the Dirty Bears the ultimate smackdown on behalf of Lloyd Blank-too-fine & his Golden Sachs.

clipped from www.bloomberg.com When Goldman Sachs Group Inc. employees cash their year-end checks, they'll have enough money to buy Bear Stearns Cos. Goldman, the biggest and most profitable U.S. securities firm, set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of 2007, according to the company's third-quarter earnings report. The stock market values Bear Stearns Cos., the fifth-biggest firm, at $14.7 billion. While analysts expect Goldman to top last year's profit record, they estimate that Bear Stearns's earnings will drop 27 percent. Goldman's shares have added 12 percent this year while Bear Stearns's are down 37 percent. Bear Stearns Chief Executive Officer James Cayne, 73, has watched the market value of his firm decline more than $10 billion from its February peak. Bear Stearns, straddled with subprime losses, is rumored to forgo the traditional cash bonus, choosing instead to hotbox its entire 383 Madison Avenue headquarters and provide a box of Cheetos to all employees except Analysts and Junior Traders who will get $100,000 par-value of Bear Stearns commercial paper.

Jimmy the Joint

Brilliant article written by Warren Spector in the WSJ.

Some choice bits:

The fund trouble was a shock for Bear, which was known as one of the Street's savviest risk managers. For years the firm relied on a system of "ferrets," or managers who monitored trades, to spot problems.

Ferrets? I think you meant Weasels…

Investment-firm chief Alexandra Lebenthal brought her 11-year-old son to visit Bear a few years back. She says she introduced him to Mr. Cayne, who pulled her aside and said, "That kid's got a rotten handshake. He's going nowhere in life."

Billy Bob Thornton is Jimmy Cayne in Dirty Bear – coming to a theater near you this Christmas!

Attendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments.

After a day of bridge at a Doubletree hotel in Memphis, in 2004, Mr. Cayne invited a fellow player and a woman to smoke pot with him, according to someone who was there, and led the two to a lobby men's room where he intended to light up. The other player declined, says the person who was there, but the woman followed Mr. Cayne inside and shared a joint, to the amusement of a passerby.

Asked more generally whether he smoked pot during bridge tournaments or on other occasions, Mr. Cayne said he would respond only "to a specific allegation," not to general questions.

Girls were hot wearing less than bikinis
Bear investors driving little Minis
Jealous 'cause I'm out getting mine
Jay with a joint and Spector with Subprime

Even when he wasn't there in person, Mr. Cayne was hands-on, say other associates. Mortgage-division head Tom Marano, who temporarily left his post over the summer to help stabilize the two flailing funds in the firm's asset-management division, says Mr. Cayne offered some helpful advice on handling irascible creditors during a critical period in July. Mr. Marano says the CEO told him in a phone call to "keep your Irish down," or cool his temper and try to negotiate calmly. (Mr. Marano is of Irish and Italian descent.)

Guess Jimmy can blame the whole crisis on the “Luck of the Irish”

On July 12, chatting with visitors over lunch, Mr. Cayne seemed less interested in discussing the markets than in talking about a breakfast-cereal allergy and his stash of unlabeled Cuban cigars.

Damn, Jimmy-Jay just str8 busted up his private stash. Obviously blazing with the analysts is a brilliant move to help Bear get favorable coverage again. What's that, you got some munchies? Here - just eat some of Bear's commercial paper.

Friends of Mr. Cayne say he is troubled by the summer's events and concerned about his legacy.

Yeah, if I just lost 61% YoY in income I’d be “troubled” too. I wouldn't be concerned about his legacy (say what?) - Bear's being sold to China, anyways.
You can’t make this ish up. Dirty Panda Bear in da house, suckas.

Burning New Money at the Stake

FYI: The Alternative Minimum Tax or AMT was an poorly thought out piece of tax legislation designed to attack 155 rich folk from 1969 that's coming back to haunt the IRS and lawmakers.

Now Washington Democrats are seeking to cover up this blunder and boost their ratings by taking money from evil capitalist pigs who made their millions in ways these simple minded totalitarians cannot understand, which obviously makes hedgies evil charlatans (even if they brought great wealth to their investors) - hmm sounds a little like the Catholic church in the Dark Ages.

clipped from today.reuters.co.uk The top tax-writer in the U.S. House of Representatives said on Tuesday consideration is being given to raising taxes on private equity and hedge fund managers to help pay for temporary alternative minimum tax relief. Adopted years ago to make sure rich Americans paid at least some tax, the AMT now hits less well-off people it was never meant to touch. Without quick action from Congress, the AMT will soon affect millions more taxpayers. The New York Democrat last week unveiled a sweeping, $1 trillion tax reform bill that included a $47 billion "patch" to fix the AMT for one year. Rangel's tax reform bill -- dubbed "the mother of all reforms" on Capitol Hill -- also proposed more than doubling the tax rate on the carried-interest profits of private equity firm managers and to prevent hedge fund managers from sheltering income in overseas tax havens.

Ignorance is a Piss Poor Substitute for Intellect

I wrote a comment on this article about the II's 40th Gala in NYC in response to the three idiots who I quote below.

• 9. October 23rd, 2007 10:50 am

  “Is this where we complain about people who have money?”

  No, this should be a post where we complain about HOW people make their money. I would argue that money in and of itself isn’t anything to abhor. How one makes their money is another issue. I would argue that the predation of this particular group of people, and in turn the corporate entities and attitudes they have spawned, on both our society and industry has been at a net cost to our society. Their half-hearted philanthropic attempts to achieve some form of personal reconciliation for their lifetimes of plundering society’s coffer won’t do a thing to reverse the ills we have borne as a result of their greed.

  — Posted by John

• 10. October 23rd, 2007 11:00 am

  All these people are from Virtual Money Making Field, just CON-ARTISTS. We must not complain about people who have money, but, look into how they got it? American Capitalists are joining the Chinese Communist Leaders to suck the blood of 1.2 billion Chinese (sorry deduct 1 Million Communist Party Members from 1.2 Billion). In the process, they will wipe out Middle Class from America. India with all its faults have democracy and exploitative power could not be concentrated at the top, like that in China.

  — Posted by Shyamal Ganguly

• 11. October 23rd, 2007 11:26 am

  Now, if we could just focus all that ambition and drive on something socially responsible, like sustainable energy sources and clean water, that might provide a real future for all on this planet - for all their so-called success, these people truly have simply exploited the rules of accounting and tax laws to create an illusion of prosperity.

  — Posted by Dan Kiely

My Response to the Above:
Looking in from the window frosted by what you consider unbiased media must be fun, John, Shyamal and Dan?

Private Equity takes broken down, misvalued, companies and fixes them for the benefit of everyone involved. The people who get laid off in these deals are the excess fat that needs to be trimmed to make the firm lean and profitable again. Nobody in America has a guaranteed job - if you want that please go live in a Communist country (like I have for 11 years) and you'll quickly understand how wonderful it is to have the chance to excel based on your own merit.

Anyone who thinks that the only way people in finance make money is by "exploiting" accounting and tax laws should at least try to take a Finance 101 class before running their mouth. That statement is simply absurd and shows nothing short of a complete lack of understanding.

Regarding "half-hearted philanthropic attempts", which certainly shows how little facts you know (or care to admit to), these people could care less about your approval of their actions and don't feel the need to redeem themselves in front of anyone. They got to where they are through hard work, quick wit and sharp intellect. Certainly much philanthropy is done for superficial reasons (by every kind of wealthy individual across the world), but do you really think that all these people care about is another blurb in the paper or their name on yet another building? No - they genuinely want to give back to the very rabid mouth that wants to do nothing but bite their hand at every opportunity.

Finally, and most importantly, don't forget who the biggest investors in Private Equity and Hedge Funds are - institutions like college endowments and pension funds. Yes - blue collar working class Americans and students who are unable to pay for college on their own benefit greatly from private equity and hedge funds doing well. As for charging 2&20% - part of capitalism is having a free market, and nobody lucky enough to have invested in RenTech is complaining about being charged 40% with the returns they're getting.

These people are neither angels nor demons - they are simply more wealthy than you and made their money in ways that you choose not to understand except as how they are relayed to you by scapegoating sensationalist (and just as ignorant) media outlets.

clipped from dealbook.blogs.nytimes.com Institutional Investor, the first trade magazine to cover Wall Street, celebrated its 40th birthday Monday by throwing itself a party at the American Museum of Natural History in Manhattan. Masters of the Universe from around the nation and the world flew in for the event. The highlight of the evening was when Mr. Kravis jokingly apologized to his peers in the audience for charging his investors 20 percent of profits in 1976, which became a benchmark for private equity and hedge funds. He said that, at the time, there was no going rate, so he and his partners decided 20 percent was fair. In retrospect, he said with a laugh, “You could have gotten 25 percent.” Then Mr. Simons of Renaissance took the stage. He famously takes more than 40 percent of all profits from his fund investors. “We blissfully ignored” the benchmark Mr. Kravis created, he said.

South Park Called Bono

Bono is indeed a piece of crap suckling at the collective "biddies" of the wealthy and then pooping some of that attention and wealth onto the poor. (If that made no sense watch last week's South Park episode 1102 "More Crap").

Instructing people, many of whom just lost half their yearly income (if not their jobs) about giving during hard times, and at once telling them about what a rich jet-set rockstar he is.

clipped from www.boston.com You've got stuck in a moment and now you can't get out of it. These lyrics to a song by Irish rock band U2 might best describe the mood at the Mortgage Bankers Association's big annual conference. The glum mood was broken somewhat by U2 singer Bono, the featured speaker at the association's gathering. "It was just so inspirational," she said, as co-worker Sal Mazzocca, seated next to her, sang a few bars of the U2 hit "Running to Stand Still." Bono charmed the bankers and lenders with stories about his "bad boy" days as a rocker. Bono - said to be just 5 feet 6 inches tall - wore platform shoes on the podium. He also appealed to the audience's collective conscience when he urged them to do humanitarian work or give to charities, even during tough times. [and now - the punchline....] Bono, who told the audience he flew in to Boston on a private jet, was whisked away after his talk.

No Shit, eBay!

I recall trying to explain to a Lazard monkey during my interview there why this deal was going to kill eBay over 2 years ago. Fortunately for me the dumb fuck insisted that according to his model this deal would pay out in 5 years, and I didn't get my job because I told him he was wrong. Good thing - Lazard kills its analysts. Literally (I was going to link to the article about the guy who died @ Lazard pulling a week of all-nighters but couldn't find it). Incidentally, since Morgan and Merrill were the bankers why did he build a valuation? Guess Lazard didn't make the cut on that one. Whoops.

The best part of this article however is the nugget (like the one you find in the toilet after plowing through a porterhouse) from Aaron Kessler of "we pretend we're not middle market" bank Piper Jaffray. Yeah, Aaron - Skype should really look at diversifying into search engines. It's an obviously untapped market, and one Skype could capitalize on with all their experience in VoIP. I shouldn't be surprised, though. Any "research analyst" who can pick stocks with any semblance of accuracy is snapped up by buy-side shops and gets paid at least quadruple what they'd make on the sell-side. So if you've been at public sell-side research for longer than 2 years you're a failure at life. I'd tell you to jump out the window, but most banks cleverly place their research analysts on the lower floors.

clipped from business.timesonline.co.uk EBay, the internet auction site, admitted yesterday that it had overpaid hugely for Skype. EBay bought Skype in 2005 for $2.6 billion. Yesterday it warned shareholders that it would have to take an impairment charge of $900 million (£450 million) because it had valued the group too highly two years ago. Niklas Zennstrom, Skype’s founder, would step down as chief executive of Skype to become nonexecutive chairman. The online auctioneer has cut bonuses due to Mr Zennstrom and others by 60 percent because it was so disappointed by Skype’s performance. It would pay only $530 million in cash to the Skype founders in the only and last payment of its kind. An eBay spokesman said: “Skype has not performed as well as we would have hoped. But we still believe Skype to be an extremely valuable asset.” Aaron Kessler, an analyst at Piper Jaffray, the US investment bank, said: “They haven’t really figured out a way to monetise their clients – they haven’t introduced new services such as search engines.”