Economy Blog

$$$ How Does the Fed Have the Legal Authority to Bail out Bear? [The Conglomerate]

$$$ The real victims: wives, interior decorators, Martignettis [NYP]

$$$ P…
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Davis’ lawyer said his client, who is said to have serviced former Governor Eliot Spitzer, is a former hedge-fund worker.

And There He Ho’s Again [NYP]

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Jimmy Cayne is done with Bear. He filed his walking-papers with the Securities and Exchange Commission, the chairman and former chief executive of Bear revealed he had sold 5,612,922 shares at $10.84. Another 45,000 were sold by his wife. That position represents almost all of Cayne’s holdings in Bear, although he may still have options for more shares.

This should put an end to talk that a group of large shareholders might seek another buyer. Cayne was rumored to have talked with Joe Lewis, who owns over 9% of the company, about finding another bidder. But that was before JP Morgan Chase raised its price tag from $2 to $10 a share.
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Plans to create an auto loan ABS (asset-backed security) index, similar to the now infamous ABX index except for auto loans instead of home equity loans, were quietly scuttled last week. Creation of such an index would have allowed investors to buy and sell credit default swaps on a basket of auto loan securitizations, in effect, betting on the credit performance….
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Over at our sibling site Above the Law, editor David Lat wonders, “Is the difference between a banker and a lawyer access to orifices?” based on the assertion by dominatrix Mistress Victoria X that “finance guys usually want things in their asses,” whereas lawyers do not. This got me wondering:
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Goldman Sachs has agreed with its clients’ assessment of Global Equity Opportunities, which is that the fund is, how to put this, a big fucking failure. The bank has taken back $1.8 billion of the $2 billion it used to bail the fund out last summer, which was GS’s effort to say to investors, “Hey, guys, this fund is good. To prove it to you, we’re going to stick our own coin in it as well and pray to god we don’t lose too much.”
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And Dubai ain’t cheap… (Kamran Jebreili/AP)
As workers spread out around the world to take the jobs the locals can’t or won’t accept, they often find themselves being treated like second-class citizens. That’s no surprise - migrant labor has gotten the shaft for millennia, going back at least as far as the Israelites building store [...]…
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Dealers will get fat on that one.
Cover was 1.15 [the lower the better]
Stop out: 0.33 [as above]
0.33 is the difference between 2 repo rates, good treasury collateral and junk fed to the Fed.
Overnight the spread is over 1.00
Fed link
E…
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This is the one we’ve been waiting for, people: on Monday, March 31, CNBC will air For The Love of Money: The Death of Seth Tobias, a one-hour documentary that will tell the “real” story of the Circle T founder’s death by drowning, with the added value of grainy reenactments, dramatic b-roll, voiceovers and talking heads. I’m so excited I don’t even care that the premise, “How far will people go for the love of money?” is way off base. (For the record, let’s get one thing straight: murder or accidental drowning, ST’s downfall had nothing to do with a love of money. CNBC should man up and give the show it’s proper name: “For the Love of Cock and Coke.” Help me out on this one, Charlie.)

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(March 27, 2008 11:02 AM, by Bryan Caplan) After I do my taxes, I often start thinking about retirement planning. Here’s an old NYT column where Austen Goolsbee……
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AIMA hosted a spirited parliamentary-style debate on 130/30 this week. The combatants: Watson Wyatt and TD Asset Management….
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The action in Lehman Brothers is more evidence about how unsteady markets are these days. Shares of Lehman Brothers fell nearly 10 percent early this morning. The rumor spread that the bank would make an announcement this morning, and many assumed (or encouraged others to assume) that it was going to announce more write-downs. This sparked rumors that Lehman Brothers could see a Bear Stearns-style run on the bank, with customers and counterparties bailing out. Options traders started snapping up puts, and shortly afterward the shares plunged.
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A Texas district court judge has ordered investment banks to fund the imperiled $19 billion buyout of Clear Channel Communications by two private-equity firms.
Judge orders banks to fund Clear Channel deal
C…
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(March 27, 2008 10:32 AM, by Arnold Kling) Allan Meltzer writes, Regulators and most politicians are good at developing rules and restrictions, but poor at thinking about the……
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(March 27, 2008 10:17 AM, by Bryan Caplan) You all know what Brad DeLong thinks about George Bush. Well, that’s what I think about politicians in general. Even……
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(March 27, 2008 10:01 AM, by Bryan Caplan) Suppose someone said: "People drive 5-15 miles over the speed limit. It’s obvious, then, that speed limits have no effect……
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Ten Days That Changed Capitalism
Taleb Outsells Greenspan as Black Swan Gives Worst Turbulence
I…
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Don’t get too worked up about the temporary restraining order issued by a Texas court today against the bank syndicate that is balking at funding Bain and Thomas H. Lee’s buyout of Clear Channel. Sure, shares of Clear Channel jumped more than 10% on the news and they’re probably high-fiving themselves over this quick win. The order purports to require the banks to fund the acquisition but it won’t do any such thing.

If you aren’t familiar with the way courts issue TROs, you might not realize that the orders are often issued without the restrained party even getting a hearing before the court. Here the banks weren’t represented, according to media reports. One of the key terms here is “temporary.” The restraining order won’t actually force a funding, which would be far more permanent. What is likely to happen is that the banks will voluntarily waive the funding deadlines in the commitment letter, removing the urgency required to get a TRO.
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Speaking of dominatrices, Meredith Whitney has been quite the busy bee: the analyst voted most likely to stick a heel up your ass spread the love-hate usually reserved for Citi yesterday afternoon to Merrill Lynch and UBS. Whitney estimated that the firms will report writedowns of $6 billion and $11.1 billion, respectively, this quarter. In the new note, published late Wednesday, Mistress W wrote that fourth quarter results will be a “rude awakening,” except to the management who’s known about the losses for a while but chose not to say anything.
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Here’s some terrible news sure to send you into a downward spiral ending on cold tiles of the Bear Stearns’s fourteenth floor men’s room, pants around your ankles and shotgun in hand (which, for some people—non-senior BSC executives—would be considered a bad thing): Jeffrey Epstein accuser, Maximilian Cordero, has broken it off with b…
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