EASY READING CULTURE OF LIFE NEWS:
Bloomberg News has an interesting inside story of the investment banking crash of last September-October. It is basically Mr. Mack the Knife’s story of those unlucky days. Morgan Stanley survived by the skin of its political teeth. Namely, the stupid deals and utterly irresponsible business was finally saved by pulling political strings in DC. I was meddling in all this business back the, trying to stop the Fed from saving these criminals. But I lost and Mack won. Lucky dude, him.
Morgan Stanley is still in business. That’s something after the colossal failures in 2008 of Lehman Brothers Holdings Inc.’s Richard Fuld and Bear Stearns Cos.’James Cayne, Mack’s rivals for almost four decades. After Lehman’s bankruptcy and Merrill Lynch & Co.’s hasty sale to Bank of America Corp. in mid- September, Mack had to hustle. He persuaded government officials to suspend the short selling he said was sending his firm’s shares into a free fall and sold 21 percent of the bank to Japan’s Mitsubishi UFJ Financial Group Inc. He was first to sign up when U.S. Treasury Secretary Henry Paulson injected $125 billion into nine banks, $10 billion of it into Morgan Stanley.
Together with Goldman Sachs Group Inc. CEO Lloyd Blankfein, Mack also shut the door on the Wall Street he had always known, seeking safe harbor as a Federal Reserve-supported bank holding company. On Jan. 13, he stepped deeper into the retail business, paying $2.7 billion to take control of Citigroup Inc.’s Smith Barney brokerage and create the world’s biggest team of financial advisers.
Morgan Stanley’s future now lies with Mack’s gamble to reinvent his bank as a company that takes less risk, helps thousands of individuals with their investments and waits for clients to once again seek advice on mergers and raising capital. It’s a far cry from two years ago, when global markets were close to setting records and Mack, a grocer’s son from Mooresville, North Carolina, with a hot temper and a locker room motivational style, personified the swagger of Wall Street.
I strongly suggest playing the video above while reading this story. As I read it at Bloomberg News, I kept laughing until tears were running down my face. This is the tragic tale of many gnomes who actually not only lost SLEEP while trying to pull their wealth out of the jaws of the Derivatives Beast, they didn’t have sex!
This is gnome hell, of course: losing money, losing sleep and no sex. They don’t mind losing money and sleep to get sex. But all three are fatal and several gnomes, including Mack the Knife had to run to Lenox Hill Hospital to be checked up by celebrity doctors. HAHAHA. Meanwhile, I and others of my ilk were busy on the internet, wrecking everything by telling the truth about Mack and his gang!
This story about a bunch of gnomes who deserve to die fills me with a great deal of cynical laughter. I can’t take these clowns seriously except these idiots have destroyed the entire planet’s financial systems! The rescue operation in this story is all about a bunch of crooks pulling political strings to save themselves while putting the rest of us deeper into public debt. And instead of committing suicide by jumping out of their top executive suite windows, the losers all got golden parachutes and the winners are richer.
[former mistress of the author of this song]
Morgan Stanley’s demise as a lightly regulated broker-dealer that bet billions in borrowed money was a shock to veteran executives. Their lifeblood — the ability to raise money in the capital markets — ran dry after one weekend in September.
The drama began when Mack and Kelleher were summoned to a 6 p.m. meeting at the New York Fed on Friday, Sept. 12.
The two sped through the rain to lower Manhattan and stepped into a high-ceilinged room filling up with Wall Street’s top dogs: Goldman’s Blankfein, Merrill CEO John Thain, Citigroup CEO Vikram Pandit, JPMorgan Chase & Co. CEOJamie Dimon and dozens more. Noticeably missing was Fuld from Lehman, the 158-year-old firm whose stock had plunged 77 percent that week.
Paulson, then Securities and Exchange Commission Chairman Christopher Coxand Timothy Geithner, head of the New York Fed and now President Barack Obama’s nominee for Treasury Secretary, passed out copies of Lehman’s balance sheet. They made it clear they wanted a private solution to bail out the firm before the weekend was over.
Mack and Kelleher drove back to Morgan Stanley at about 8:30 p.m., picking up take-out Italian food on the way. They grabbed co-presidents Gorman and Walid Chammah, 54, who had aborted a trip to a wedding in Dallas, and sat down in Mack’s office.
“We met until the wee hours of the morning,” Gorman says. “We thought, ‘My god, this was a crisis that really is threatening the heart and soul of Wall Street.’”
Actually, this story began in July, 2007. The battle between the G7 and China over the value of currencies exploded into a battle between the Bank of Japan and the Chinese communist leaders. This killed the Japanese carry trade. The left over deals on Wall Street and other bourses in Europe all continued for exactly two more months until everyone discovered that these deals, all based on ZIRP yen, were collapsing due to the inability of selling these debts to other parties…like the Chinese!
Global stock markets collapsed. All of the ‘up’ days since then have been strictly due to two things: immense, truly gigantic government bail outs or the yen dropping in value so hopes of restarting the carry trade leads to high hopes that this nightmare, caused by excessive lending due to the Japanese carry trade, will end. So everyone limped along until the following September when all the bills became due.
Yesterday, we learned that England’s entire banking system was less than 3 hours from collapse when the English made under the table deals with the Germans, French, Americans and Japanese so they could float their system. I knew everyone was in trouble and I stayed up all night, tracking the news and writing about the desperate measures done to fix things. This was totally ridiculous.
For the people who created this mess were ‘fixing’ it by basically dumping the entire steaming pile on top of a giant structure of mega-debts owed by several key first-world countries: the US, Japan and the UK. Japan, being the only creditor nation of the three, basically wanted one thing: a weak yen.
So after the mess was cleared up, there was a lot of talk about making the yen weaker. The Bank of Japan even said, they would ‘take actions’ to insure this. But alas for them, since the Chinese communists want a strong yen, all jawboning down the yen failed. The yen grew stronger.
During all this, Paulson suddenly announced his Big Bail Out Bill: TARP. We sprang into action here and readers sent me money so I could hurry down to DC and raise hell. Across the US, people raised hell and Congress didn’t pass the bill. Only after lots of corruption, bribery, scandalous deals under the table and outright crime, did a bill pass, filled with goodies, stuffed like a Thanksgiving turkey with wild spending at every level.
Note the business about wanting a ‘private’ deal in this bail out of Morgan Stanley, a bunch of stupid pirates if there ever was one. They didn’t want the people bailing them out, the US taxpayers, to have any say. The business of this bail had to be crafted so these crafty gnomes get all the loot while no controls.
Of course, they didn’t get all of this, thanks entirely to us bloggers who raised hell. But they got a lot more help than we wanted them to get. I wanted these clowns arrested, not protected.
That night marked the start of the direst days in the history of Morgan Stanley — a four-week period that tested Mack and his crew in a manner beyond anything they had imagined when the year, or their careers for that matter, began.
Chammah slept on the pale-brown leather couch in his office during at least two weekends while heading talks with Mitsubishi UFJ, which held meetings in Tokyo when it was 3 a.m. in New York. Kelleher suffered a back injury in a car accident and had to conduct business lying down on his office floor. He lost 14 pounds. Three managing directors, including Nides, went to hospitals after using Mack’s blood pressure monitors.
Poor gnomes. They fall apart when they are deprived of sex and sleep. Jail is supposed to be unpleasant. These wilting flowers couldn’t handle it, I guess. This is why they weren’t arrested. Of course, owning our government and then looting it, is the ticket to avoiding jail time.
Later, Geithner asked Kelleher and Goldman CFO David Viniar, “Can you guys survive until next weekend?” They both said yes. “It seemed like Geithner just wanted to get through a week at a time,” Kelleher says…
At about 10 p.m. that night, Kelleher left Morgan Stanley headquarters, on the north end of Times Square, and observed Lehman workers carrying boxes out of their building on Seventh Avenue. “I thought, ‘I’m not going to have Morgan Stanley employees walking out of this building with a cardboard box,’” he says. “I mean, you may say these are fat-cat bankers, but these are real people. It was all very emotional.”
A few hours after midnight, Lehman filed for bankruptcy protection.
The poor, pathetic gnomes bravely soldiering onwards! They aren’t ‘fat cats,’ they claim to be ‘real people’. Er…no. They are gnomes.
Mack, whose nicknames over the years have included Darth Vader, is known for furious outbursts. Yet throughout the crisis, he was even keeled, say executives and other employees who observed him. He walked the trading floors, ate pizza with salespeople and stopped in at client meetings in an effort to keep his staff calm and working. He delivered pep talks, saying Morgan Stanley was in battle mode.
It wasn’t enough. After watching what happened to Lehman and Merrill, Mack knew the only way to regain the market’s confidence was to raise new capital or pursue a merger, according to people familiar with the events. He couldn’t just assure investors the firm had enough money; he had to show he could find a partner who had enough faith in the firm to team up.
Mack talked to Pandit about a deal with Citigroup, entered merger talks with Wachovia Corp. CEO Robert Steel and asked Gao Xiqing, vice chairman of China Investment Corp., the Chinese sovereign wealth fund that had invested $5.6 billion in Morgan Stanley the previous year, to come to New York. He even arranged for a couch to be moved from the Morgan Stanley dining room to the executive suite and brought in a physical therapist for Gao, who has a bad back.
See? Even Bloomberg notices that this Mack dude pulled many strings. And he pulled very hard. I’m certain, he let them know that past generosity would be coupled with future largess. Hillary moved upstairs and is being replaced with Gillibrand. I wonder if she can resist the offers of tons of cash? The two week SEC ban on short selling which first was ONLY for Goldman Sachs and Morgan Stanley but were expanded due to howls of rage, this ban was a fraud.
It was a cheat! Mack the Knife made a fortune, short selling other people! Ditto, Goldman Sachs! These gnomes prided themselves on how ‘tough’ they were! When they destroyed businesses by dumping mountains of debt on them and then firing lots of people, they said, ‘This is how the free markets work! Suck it up, HAHAHA.’ They showed absolutely no mercy. Not one tiny bit.
Now, seeing these monsters weeping…for themselves….is instructive. They are all psychopaths. They never feel the pain of their victims. But deprive them of a little sleep and sex and they go stark raving mad and want us to weep for them!
Millions of lives have been destroyed by these amoral gnomes. Now, it is their turn to be eaten by the monsters they, themselves, created when they went raiding in the Cave of Wealth and Death. When the world’s biggest brokerage houses busted up Wall Street’s game to cheat so they could win, this screwed up all investing. No one wants to play the game anymore.
Gold sellers have had a field day. As stocks fall, gold rises. This is because investors are sick and tired of the crooked game on Wall Street. The same criminals who wrecked it and then twisted the rules by calling for the help of powerful politicians who are corrupt, this soured the game for everyone else who are taking their marbles and going elsewhere.
For a second weekend, lights were ablaze at 2 a.m. in Morgan Stanley’s executive suite. Bankers and lawyers were working on four projects: a merger with Wachovia, a second capital infusion from the Chinese, an investment from Mitsubishi UFJ and the paperwork to become a bank holding company.
Lifeline for Mack
Mitsubishi UFJ was a long shot. Mack already knew Wachovia’s Steel, a fellow Duke University alumnus, and CIC’s Gao. Mack didn’t have a relationship with Mitsubishi UFJ CEO Nobuo Kuroyanagi, who was half a world away.
As the weekend progressed, Morgan Stanley executives realized Mitsubishi UFJ was their best option. By Sunday night, following negotiations conducted over the phone with translators, Mitsubishi UFJ signed a letter of intent to buy 10-20 percent of Morgan Stanley. The same night, the Fed approved the firm’s request to become a bank holding company.
For Mitsubishi UFJ, it was an opportunity to buy a piece of a storied financial firm and gain a seat on the board as the Japanese bank was expanding in the U.S. For Mack, who met Kuroyanagi, 67, in Tokyo on Sept. 27, it was a lifeline. Two days later, the terms were announced: The Japanese bank would buy $3 billion of Morgan Stanley’s common stock for $25.25 apiece, as well as $6 billion of convertible preferred stock with a 10 percent dividend. They’d own a fifth of the firm.
So, who is the creditor and who is the beggar? Mack had to crawl to Asia to be saved. The Communists told him to go to hell. The Japanese are more than happy to force a harsh deal whereby they expand their powers in the US. Remember: even if Japan’s domestic economy stinks, the Japanese upper classes are doing just fine. They are growing their empires, not watching it collapse!
The Fed cheated fate by allowing Goldman Sachs and Morgan Stanley to become banks…literally overnight and right after outlawing short selling. Under this Mafia-style cover, these guys sold themselves to foreign powers. Both Morgan Stanley and Goldman Sachs have seen their stocks collapse. Mack the Knife’s stocks briefly became penny stocks and should have been delisted. Incidentally, the DOW Jones doesn’t delist any stocks that turned into penny stocks this last year. I wonder why [HAHAHA
Let’s look at the last few days: Friday morning and today, lots of activity. All of the financial businesses of the gnomes are shooting upwards! Now, the real economic news is just terrible. Housing is worse and worse. Bankruptcies are rising. Riots are breaking out across the planet. Buying in stores is declining. But these guys, these gnomes are doing just great!
Investment banks including Morgan Stanley and Bank of America Corp. may share about $207 million in fees for arranging Pfizer Inc.’s takeover of Wyeth Inc., a rare feast amid the leanest merger market in four years.
Wyeth’s advisers, New York-based Morgan Stanley and Evercore Partners Inc., may split about $125 million on the $68 billion deal, according to Bloomberg fee estimates. That’s 24 percent of what Morgan Stanley got from all of its advisory work in the fourth quarter, and more than Evercore collected in six months.
M&A revenue has been falling across Wall Street as corporations shun mergers to concentrate on surviving the global economic decline. Just $419 billion of takeovers were put together in the last quarter of 2008, the slowest pace since the third quarter of 2004. The dearth of deals is pinching the world’s biggest merger advisers, such as New York-based Goldman Sachs Group Inc. and JPMorgan Chase & Co., at the same time revenue from trading and selling stocks and bonds is declining.
We are seeing a push from Pfizer that will create a proto-monopoly. This consolidation of business is going on all over the place. The deal went from $60 billion to $70 billion in just four days. Every hour, the deal became more expensive for Pfizer.
But the gnomes are happy! They raised the cost of this deal! So what, if this leads a mountain of debt on the new corporation? Pfizer is well-financed and could pull this deal due to not being already deep in debt from the previous period of hyper-deal making. But anyway, these awful people who demanded the government prevent short selling, are now happily raising the debt level of Pfizer by $10 billion by bottom feeding.
Pfizer’s advisers — Bank of America, Goldman Sachs, JPMorgan, Barclays Plc and Citigroup Inc. — together may get $82 million in fees, not counting what they’ll earn arranging a $22.5 billion lending package. The transaction is the biggest in health care in almost five years.
The deal is a coup for Paul Taubman, 48, Morgan Stanley’s head of investment banking. Taubman is working with Clint Gartin, a senior health-care banker and vice chairman, and Susan Huang, an M&A specialist.
Note how Pfizer spread around the goodies. I am also betting, we will see in the news next week, announcements that Pfizer will be firing more people as these organizations merge! This, in turn, will make the global economy weaker. More people will be out of work and declaring bankruptcy. This is why these deals are not a sign of life but are still killing the system.
Back to the Mack the Knife story:
That same day, when Paulson’s first attempt to pass a $700 billion bank bailout bill was blocked in Congress, the S&P 500 plunged 8.8 percent, the most since 1987.
Morgan Stanley shares fell 15 percent. Mitsubishi UFJ’s pending purchase was already in the hole.
When the government’s financial rescue package finally became law on Oct. 3, it didn’t soothe Morgan Stanley investors, who feared that the Japanese bank might pull out. By Oct. 8, the two companies had assured investors the purchase would go through and the Fed had approved Mitsubishi’s application for UnionBanCal to become a bank holding company, a process that often takes up to three months. Morgan Stanley shares had fallen another 30 percent….
On Oct. 10, the same day the shares hit their low point, Mitsubishi UFJ’s Kuroyanagi was meeting with members of the Fed’s board of governors in Washington, receiving assurances that if the government injected capital into Morgan Stanley, his bank’s equity investment wouldn’t be wiped out. Spokespeople for Mitsubishi UFJ in Tokyo and the Fed declined to comment.
Chammah and Kelleher worked through the weekend, fueled by take-out food from Baldoria, a theater-district restaurant. On Sunday, Mack and Gorman were in Washington for International Monetary Fund meetings and went to a cocktail party hosted by Mitsubishi UFJ. On the way back to the airport, Mack got a call from Paulson to meet at the Treasury the next day. Paulson, a Wall Street competitor of Mack’s when he ran Goldman Sachs from 1999 to 2006, wouldn’t elaborate.
$9 Billion Check
Before the stock market opened in New York the next day, Mitsubishi UFJ had a new deal. The Japanese bank would get preferred stock instead of the common stock that was already underwater, raking in an extra $300 million in annual dividends.
There was still one stumbling block: Because Monday, Oct. 13, was a bank holiday in both the U.S. and Japan, the money couldn’t be wired. Instead, unwilling to risk what would happen to Morgan Stanley’s stock if it waited one more day, Mitsubishi UFJ hand delivered a paper check for $9 billion on Monday morning.
What a surprise. The Japanese have cash. Not only that, they can get it whenever they want it from the ZIRP system run by the Bank of Japan. Now, we have a ZIRP system and the vampires who run Wall Street will access that rather than needing more money from the Treasury.
They hate money from the Treasury. It exposes them to scrutiny. They can be seen, at work. People can demand to see their books, pry into their dark affairs. People can demand honesty! They much prefer to get it from other dark dealers like in the Federal Reserve. Or better still, the much murkier Bank of Japan.
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