It should be no surprise that the Korea Development Bank (KDB), South Korea's state-owned lender, is in talks to set up a consortium with private banks to invest in distressed U.S. investment bank Lehman Brothers, whose shares are down 75% this year.
A deal could inject as much as $6 billion in capital in return for a stake of up to 25% in the investment bank, which has been hit hard by the downturn in the credit markets and the housing crisis. Shareholders face massive dilution if the deal goes through, with shares potentially dropping to $12 from around $16 now.
KDB Governor Min Euoo-sung says that discussions were under way ''to form a consortium with private banks as (we) believe it is more desirable to acquire Lehman Brothers (LEH) jointly rather than alone.'' Indeed.
Because given its size, KDB simply cannot digest Lehman's outsized and perilous balance sheet on its own.
It’s also been reported that Jun Kwang-woo, chairman of South Korea's Financial Services Commission, has balked over letting a state-run institution lead the way in an acquisition of Lehman. "Generally speaking, the private sector should be the leader in such a deal," he has reportedly said.
Cold feet would be understandable given that KDB’s balance sheet is about a tenth of Lehman’s, and given Lehman’s nuclear meltdown on its balance sheet.
Take a look at KDB's balance sheet. When you do the English and currency translations, you'll see that as of December 2007, KDB only had about $110 billion in assets and $21 billion in shareholders' equity.
Swallowing, all on its own, Lehman's $639 billion in assets, much of thatdamaged, and $613 billion in liabilities onto its balance sheet would have been an Olympic feat for KDB. Ladenburg Thalmann analyst Richard Bove has already said Lehman was ripe for a hostile takeover.
Whatever the takeover scenario, Lehman needs to move fast. Now.
Because given the perilous state of its balance sheet, the only institution able to do a hostile takeover would be the Federal Reserve or the Treasury. And Lehman knows it.
Spreads on mortgage-backed securities versus Treasurys of similar maturities have steadily widened to levels last seen in March, when the markets were on the verge of a national nervous breakdown after the Federal Reserve helped orchestrate the shotgun wedding between JPMorgan Chase (JPM) and Bear Stearns, which was on the brink of collapse.
Lehman is sitting on nearly illiquid $40 billion in commercial real estate as of the end of the last fiscal quarter and another $24.9 billion in potentially toxic residential assets, much of which is thought to be deteriorating rapidly.
Lehman's level 3 assets are also a fire-engine-red flag. Level 3 assets are the illiquid, toxic waste that no one wants in the market and which management prices on its own. Lehman's level 3 assets make up 146% of its tangible common equity, the truest gauge of its book value. That 146% is less than Goldman Sachs (GS), where it is 162%, but far more than Merrill Lynch, whose recent fire sale of collateralized debt obligations (CDOs) to Lone Star Capital, a Dallas vulture fund, at 22 cents on the dollar (more like six cents because Merrill loaned Lone Star 75% of the deal) dropped its percentage down to just 48%.
As its assets erode in value, more writedowns and losses loom on top of the $8.2 billion in writedowns Lehman has already booked. Wall Street estimates have it that Lehman may report losses of around $4 billion when it discloses third-quarter results in mid-September. It is expected that the investment bank will announce at that time job cuts of up to 1,500, the fourth round of job cuts -- bringing the total to 6,400 since June 2007 -- as well as the deal to raise fresh capital to help offset the losses.
Goldman Sachs analyst William Tanona is forecasting a total of $10 billion of writedowns for Lehman, Morgan Stanley (MS), JPMorgan Chase and Citigroup (C) in the third quarter. To date, investment houses and banks around the world have reported more than $510 billion in losses.
Pricetags are being put on everything now at Lehman, with the value of its 575-foot-tall headquarters thought to be worth $1.3 billion, and the value of its asset management business, Neuberger Berman, said to be worth up to $13 billion, far surpassing Lehman's $9 billion market capitalization.
Talk now is of plans to warehouse Lehman's nearly illiquid, difficult-to-value $40 billion commercial real estate portfolio in a separate company, a good bank-bad bank structure in which Lehman's shareholders would be given equity stakes.
Dumping the landfill would be a good move, as it would cleanse Lehman's tattered balance sheet of mortgage-backed securities, leveraged loans and toxic derivatives -- and shore up its battered stock price.
I sure hope the government doesn't bail them out. It scares me to even hear of it being considered. The Fred and Fan situation just encourages mismanagement with the knowledge that bailout is there as an option. I'm no expert on corportate business, and I'm not sure what goes on with these deals, but I think there should be some VERY harsh pentalties to the CEOs/CFOs/presidents/boards/whatever when government bailouts occur. I think these people should all get fired (naturally) but with no severance packages or benefits. On top of that, they should have their wages for the past 5 years garnished and be prevented from working in leadership positions ever again. They need to be made examples of. There needs to be a climate in this country where a bailout is not seen as favorable so that leaders do everything in their power to keep their companies healthy and have the foresight to make sound decisions.
September 14, 2008 at 3:34 pm
Dana Swan
There needs to be a limit of 2 comments by one person............................
September 4, 2008 at 12:29 am
Greedom
Hey
Maybe Paulson jumped at assistance so quickly to fend off the embarrassment OF Abu Dhabi stepping in to just buy it.
Hey. Saudi Arabia seriously wants to become the next World Trade Center.
And Abu Dhabi the next Banking center, uh oh, I got those two mixed up.
It's the reverse.
Still - 1/2 of all the world's cranes are in Dubai.
There is SERIOUS acquisition and development funds available - and for Freddie to be on the market ?
yikes.
I bet with 1 trillion you could just buy all the media - obfuscate the ownerships - by creating some dummy prop networks too - but still - I bet you don't have to even go to war with someone, you can just buy the infrastructure to which the culture derives daily intake from.
September 3, 2008 at 6:09 pm
Greedom
I wonder how 'diversified' Lehmans, Bear Stearns, the lot that have been, and will be taken down through too much exposure to debt products of low integrity.
I suppose there is the reality people know, LIKELY some localization going on there with great success, e.g. neighborhoods etc, and then there is what marketing can come up with - and just maybe profess through newspaper, radio or TV.
Then there is the local reality of people reacting TO that presented 'could be you' culture as witnessed even on Fox Business from Midnight to 5 am - Paid TV Advertisements.
I can't even tell things apart anymore when it comes to Paid TV Advertisements.
if FBN is showing mid to 5 am, 5 hrs of Paid TV Ads, how do I not know the other 19 aren't Paid TV Ads too. It is not just FBN on THAT issue though, MANY networks would fall into that.
I do recall some, 9 ? 10 ? years ago thinking, 'Hey wait a second, TV is just a one way web browser ! stuck on the same page(s).
At that point, I guess it's dead.
Feb, 2009 though will bring everyone to Digital, I guess FBN employees can get a few extra breaths from Feb. 2009 onward, as they won't have to say 'The only digital...' UNLESS, one is saying the filming TO the broadcasting is all digital..
Diversify seems to be a rather powerful concept though.
So rewarding.
Investments ? win
Culture ? so long as you're not the French, win.
I say that because the language French is painstakingly preserved to some degree from any outside 'influences' when possible. So, I don't see the French diversifying linguistically at least in any global means.
Perhaps though, loss diversified is what we have now...
obfuscated as to origin blobs of debt products with integrity lacking.
I bet Abu Dhabi is holding off for Fannie and Freddie.
Watch, it will be 'Open an account with Bank of Abu Dhabi FFM (Freddie and Fannie Mae)' to gain access to your current accounts and servicing.
Odd to picture that scenario though
50 % of US mortgages being 'founded' or 'based' in the desert far far away.
I can see some US soldier going
"Hey Larry, while we're here I want to open an account real quick, hold on, and if anyone freaks, shoot- bbiam Larry"
September 3, 2008 at 6:04 pm
Greedom
This next generation of Americans knowingly, or unknowingly living in a global society, AND economy - still buying into red and blue mentality ?
Not only will STILL be paying off the LAST Savings and Loan 1 trillion USD + scam
but they'll be paying for this current mess too.
When they graduate ?
IF they realize they'll NOW be competing in a global job market ?
heh
the money they make - probably 2, 3 ? 5 percent will go to cover these 'write downs'.
Maybe US collegiate seniors should all just invest in HSBC ?
no, that would be making the same mistake - another good line that just hit me
"Never put all your eggs in one nation state in a global economy"
Oh who was it ? Cramer ? "Diversify ! Diversify "
Indeed
September 3, 2008 at 10:28 am
Greedom
Imagine, if you could MAKE 50 billion, why not invest 20 billion in making sure you have complete - and I mean, complete, as in - give the illusion there is even a CHOICE between NBC, CBS, ABC, onward -
or, if you can't afford to buy everyone ? Just create a name to call all the others -
Paverelli's or ? hmm Librali's or perhaps - Liberals or whatever
just buy CNN's software - and a face change of at least 10 staff, and you're in business.... You just have to find some temporary sensationalism to hold you over until you want to tilt the markets.
Runaway bride all the way up to - Bear Stearns Schwartz coverage - "No problem here, keep moving" (on Friday before meltdown)...
OH who am I kidding
no one would ever seek to acquire an weighted share of global media resources, just so they could manipulate the consumer, really ? never !
here's a line that just came to me that seems to say what I'm trying to say
"Remember, Buy American, Made in China American that is, none of that Thailand crap"
September 3, 2008 at 10:24 am
Greedom
If I were Lehman ?
You know ? this idea JUST occurred to me -
Wall Street Journal cost what ? 5 Billion from the Bancrofts ?
BEANS
If you are a 30 billion USD investment bank ? Why not just BUY the press
the entire corporation, for 5 billion and tilt any press coverage that would otherwise be damaging to you.
This makes a lot of sense, it might be criminal, as it would be disadvantageous to ones community.
But this is the nature of NewsCorp as well
it is dangerous, because the price for being wrong is too high.
September 3, 2008 at 10:20 am
Greedom
Maybe everyone should get in line
and realize some common sense here:
for one - and I said for one before I had a one - but - THIS just occurs to me:
if these investment banks take on such lavish irresponsible ventures so as to put themselves at risk based on their participation in accepting phony debt tokens/shady loan products with no backing by the consumer (let's just say the 4% of all mortgages this affects) ?
Then let's just at some point say - hey, if you are propped up on 20 billion never to be paid credit card debt (as in sale of consumer debt), let's just start calling your entire inst. one big racked up credit card that you can't handle the interest on.
September 3, 2008 at 10:08 am
Greedom
I see this same pattern with oh ? Denver ? Savings and Loan ?
Now, where was China to bail out the S&L's that failed.
Also, where was HSBC on IndyMac ?
So much for my BoC wants into the US, BoC could have picked up IndyMac ?
or backed it ?
Come on, come to think of it ? China backs the US Dollar to SOME degree, oh wait, no, it backs it BUT it also detracts from it based on US leveraging to China through Treasuries.
Hmm - if China is good enough to pay for the Iraqi War then China is good enough to buy out and back institutions like IndyMac
Where was China with IndyMac ?
It's like that song 'Where were youuuu... Where were youuuuu ' (Foreigner was it ? )
funny HSBC can do this too
last I checked (SOME time ago), they were near the top for exposure to sub prime -
Where are THEIR Q3 and Q4 losses heh
whilst US institutions continue to get pegged at expected Q3, Q4, Q1 2k9 etc... write downs.
Hmm - What's HSBC got that say - BS or Lehman's doesn't ?
short of even MORE write downs and STILL they/HDBC can go shopping in NYC - and buy institutions that FAILED due to the very same impact HSBC took.
Really, I guess HSBC is that much bigger.
Took me 2 full hours to find the breakdown of HSBC as to abbreviation last year learning of HSBC.
It's one big fat laundering funnel to the West - Tellin' Ya.
September 3, 2008 at 9:48 am
Greedom
I forgot to close on my point using say- Enron as an example:
Where you have top floor execs saying - "Let 'er burn but get the pension funds out of the building before it burns"
Or flat out behind the scenes liquidation.
Yes, that's right.
I'm suggesting yet another perspective is Lehman and Bear Stearns both knew they were playing with - not toxic waste - but transport channels to allow the company to be cashed in on BACK THEN, and the debt to be passed off NOW.
September 3, 2008 at 9:43 am
Greedom
I do say, looking back ?
If only we could have guessed Bear Stearns, Lehman - would be falling down as if they were destined to ? We could have shorted them all !
Without that transparency for shorting ?
you really can't tell who plants seeds ahead of time can you ?
It's almost as if these institutions either demonstrated great carelessness and over leveraging OR flat out incompetence, or ? option C, which just popped in my head - at some point ? at the top super senior level, a tipping point is reached where the executives say - let's push this car over the cliff. ? ? ? We'll get out now, and (heh - CountryWide 2 November's ago CEO ) no one will connect us with it.
I like the reference today in the news about HSBC courting Lehman.
You know ? Bank of China really wants into the US, I bet the way in is FIRST, get yourself a 1.3 billion office building to organize a HQ. Then again Bank of China IS in the US. I'd LOVE to find a branch and get a card, just to have it in the Chinese, a language I'm finding easier to learn if I approach each and every new symbol with this prefix "I wonder what this one could mean". 26,000 symbols later this WILL pay off !
BoC probably feels the same only they want 26,000 branches world wide !
Either way, I wonder if how quickly Manhattan financial sector becomes China Town all the sooner.
That's how you do it too, that's the Hathaway way, even in their case with PetroChina, but China is picking up some great companies at fire sale prices.
September 3, 2008 at 9:40 am
Greedom
New employee at cafeteria on floor 37 during an interview process.
"oh yeah Bob, yeah, here they have extra extra's - and wait till you see the super seniors package, you'll want to commute all the way in from the Fells".
Bob's income ? 2007 1040 ? 7 million ?
September 2, 2008 at 4:24 pm
Greedom
Wall Street deserves its own company.
If only the people invested faith and belief in the dollar as do the hardcore religious fundamentalists invest in ? I don't know. Last I checked, no one had private access to the truth, nor was there an explicit route to it.
Odd, the more religious people become as we witness I suppose we can say- the more malleable they were ? are ?
Wall Street has turned into give me my piece 10 to 1 and MY share - and maybe even if you work in the sector you can say - and give me an EXTRA MY share, and for yet even fewer, but some can say my Extra Extra share. 7 figures and up.
Where can a 26 yr old get 3 million sign on - oh well.
I've yet to see the connection properly investigated regarding Dr. Thorp, the MIT mathematics professor who set out to skate black jack, and did so, and published the first book on it, he ALSO according to the documentary I was watching, THEN sought out to approach Wall Street - well - let's face it. He JUST LEFT Reno was it ? I get them all mixed up, I can't even say what state Reno is in, and probably for the better.
Maybe we can all say that was a formal beginning for Vegas/Casino mentality brought to Wall Street.
well able to automate thought processes using the 'machine' myself, I can't imagine what's become over the years to let software push ahead, sit, stop gap, push ahead, penny by penny.. Like that song Minute by Minute - music wise at least.
I am all yea for progressive growth, creative capital, whatever you cant to call it, responsible capitalism, but profit from obfuscated loss - eeks. That's what I treanslate this above mention of 'L said M, N and O will probably report 10 billion blah blah in the next quarters' - something to that regard.
I think what we're seeing here with forthrightedness ? is it ? would be like dating Herb Tarlick from WKRP - Herb - one date TWO would reveal his 312k debt from 1983 to present, then on date 3, you'd find out he's being sued and really owes 2x at nearly 750k. Date 4 you'd find out he really owes 12x.
?
Let's hope it's not 12x in the end.
Otherwise, just imagine if Herb were to walk up to a new potential client schmoozing them, probably with canned caviar, and right off go, Hi, My name is Herb Tarlick, AND I've also got oh ? a total of 83 Billion in write downs foreseeable ?
I just think it's not so much shifty for these slowly bled losses - it's like we're in 1823 and someone is 'bleeding' you to 'heal you' - slowly - weakness. Same with these time released capsules of write downs.
Now, who at the beginning of any period can predict their corporate losses ?
true - no one. However, It's interesting to see totals on write downs.
I don't think this author has the tally right either, well, no one can, it's moving as you compute, but still. I say if S&L was over 1 trillion - which I believe it was, let's ask ? If we're seeing 500 billion in write downs, it's a LONG way to go, not even 1/4 just calling the mortgage / sub prime fallout even a TWO trillion. 500 + 500 + 500 + 500 = 2000 billion -if you follow my point.
I bet we see far more than 2 trillion fallout from this - globally ? sheesh.
Remember, even at 2,3 or 4 % - globally, that's still over 2 trillion.
I just meant in the US. I bet we see over 2 trillion, ESP. if S&L THAT far back was over 1 trillion. Watch someone peg it at 4 trillion by 2011.
more debt.
Little do 21 year old university students know, they are paying off the Savings and Loan losses -
My latest realization ? This fallout and loss surpasses the entire Iraq War costs.
And yet ? because I think it requires a bit of understanding that the losses are composite- from so many institutions/corporations- people may not 'grasp' how 2 + trillion burden can be placed on them to be paid off through their labor or commerce exchange in taxes.
September 2, 2008 at 4:22 pm
Kevin McIntee
EMac I'm a huge fan of yours. You are an absolute genius, you've been incredibly accurate and way out in front on so many news items that affect investors. I have a huge amount of respect for you, you've got a ton of integrity. You are one of the rare few in business journalism I listen to, I've been a fan of yours since your days at the Wall Street Journal. Keep up the great work, we need you desperately!
September 2, 2008 at 3:37 pm
Harish Vembu
Hi/Hello,
Nice article of relevance.
Sad to hear about the fate of Lehmann Brothers. I have never worked for a Bank. But the current downturn and meltdown of the financial Instituitions prove that there are lot of bubbles waiting to be burst in Financial Sector.
Back in India and all around the world we think high about these instituitions. In Modern day market even the big players are shaken to their core.
Fundamentals needs to be strong for any organization. Another thing that puzzles me is that KDB has come in for rescue why not anyone from within US or Europe??.
Is it because of lack of risk takers locally or something else??. It appears to me that US financial sector is beginning to lose the battle to Asian counterparts.
Best Regards
Subscribe to Comments
Jason
I sure hope the government doesn't bail them out. It scares me to even hear of it being considered. The Fred and Fan situation just encourages mismanagement with the knowledge that bailout is there as an option. I'm no expert on corportate business, and I'm not sure what goes on with these deals, but I think there should be some VERY harsh pentalties to the CEOs/CFOs/presidents/boards/whatever when government bailouts occur. I think these people should all get fired (naturally) but with no severance packages or benefits. On top of that, they should have their wages for the past 5 years garnished and be prevented from working in leadership positions ever again. They need to be made examples of. There needs to be a climate in this country where a bailout is not seen as favorable so that leaders do everything in their power to keep their companies healthy and have the foresight to make sound decisions.
Dana Swan
There needs to be a limit of 2 comments by one person............................
Greedom
Hey Maybe Paulson jumped at assistance so quickly to fend off the embarrassment OF Abu Dhabi stepping in to just buy it. Hey. Saudi Arabia seriously wants to become the next World Trade Center. And Abu Dhabi the next Banking center, uh oh, I got those two mixed up. It's the reverse. Still - 1/2 of all the world's cranes are in Dubai. There is SERIOUS acquisition and development funds available - and for Freddie to be on the market ? yikes. I bet with 1 trillion you could just buy all the media - obfuscate the ownerships - by creating some dummy prop networks too - but still - I bet you don't have to even go to war with someone, you can just buy the infrastructure to which the culture derives daily intake from.
Greedom
I wonder how 'diversified' Lehmans, Bear Stearns, the lot that have been, and will be taken down through too much exposure to debt products of low integrity. I suppose there is the reality people know, LIKELY some localization going on there with great success, e.g. neighborhoods etc, and then there is what marketing can come up with - and just maybe profess through newspaper, radio or TV. Then there is the local reality of people reacting TO that presented 'could be you' culture as witnessed even on Fox Business from Midnight to 5 am - Paid TV Advertisements. I can't even tell things apart anymore when it comes to Paid TV Advertisements. if FBN is showing mid to 5 am, 5 hrs of Paid TV Ads, how do I not know the other 19 aren't Paid TV Ads too. It is not just FBN on THAT issue though, MANY networks would fall into that. I do recall some, 9 ? 10 ? years ago thinking, 'Hey wait a second, TV is just a one way web browser ! stuck on the same page(s). At that point, I guess it's dead. Feb, 2009 though will bring everyone to Digital, I guess FBN employees can get a few extra breaths from Feb. 2009 onward, as they won't have to say 'The only digital...' UNLESS, one is saying the filming TO the broadcasting is all digital.. Diversify seems to be a rather powerful concept though. So rewarding. Investments ? win Culture ? so long as you're not the French, win. I say that because the language French is painstakingly preserved to some degree from any outside 'influences' when possible. So, I don't see the French diversifying linguistically at least in any global means. Perhaps though, loss diversified is what we have now... obfuscated as to origin blobs of debt products with integrity lacking. I bet Abu Dhabi is holding off for Fannie and Freddie. Watch, it will be 'Open an account with Bank of Abu Dhabi FFM (Freddie and Fannie Mae)' to gain access to your current accounts and servicing. Odd to picture that scenario though 50 % of US mortgages being 'founded' or 'based' in the desert far far away. I can see some US soldier going "Hey Larry, while we're here I want to open an account real quick, hold on, and if anyone freaks, shoot- bbiam Larry"
Greedom
This next generation of Americans knowingly, or unknowingly living in a global society, AND economy - still buying into red and blue mentality ? Not only will STILL be paying off the LAST Savings and Loan 1 trillion USD + scam but they'll be paying for this current mess too. When they graduate ? IF they realize they'll NOW be competing in a global job market ? heh the money they make - probably 2, 3 ? 5 percent will go to cover these 'write downs'. Maybe US collegiate seniors should all just invest in HSBC ? no, that would be making the same mistake - another good line that just hit me "Never put all your eggs in one nation state in a global economy" Oh who was it ? Cramer ? "Diversify ! Diversify " Indeed
Greedom
Imagine, if you could MAKE 50 billion, why not invest 20 billion in making sure you have complete - and I mean, complete, as in - give the illusion there is even a CHOICE between NBC, CBS, ABC, onward - or, if you can't afford to buy everyone ? Just create a name to call all the others - Paverelli's or ? hmm Librali's or perhaps - Liberals or whatever just buy CNN's software - and a face change of at least 10 staff, and you're in business.... You just have to find some temporary sensationalism to hold you over until you want to tilt the markets. Runaway bride all the way up to - Bear Stearns Schwartz coverage - "No problem here, keep moving" (on Friday before meltdown)... OH who am I kidding no one would ever seek to acquire an weighted share of global media resources, just so they could manipulate the consumer, really ? never ! here's a line that just came to me that seems to say what I'm trying to say "Remember, Buy American, Made in China American that is, none of that Thailand crap"
Greedom
If I were Lehman ? You know ? this idea JUST occurred to me - Wall Street Journal cost what ? 5 Billion from the Bancrofts ? BEANS If you are a 30 billion USD investment bank ? Why not just BUY the press the entire corporation, for 5 billion and tilt any press coverage that would otherwise be damaging to you. This makes a lot of sense, it might be criminal, as it would be disadvantageous to ones community. But this is the nature of NewsCorp as well it is dangerous, because the price for being wrong is too high.
Greedom
Maybe everyone should get in line and realize some common sense here: for one - and I said for one before I had a one - but - THIS just occurs to me: if these investment banks take on such lavish irresponsible ventures so as to put themselves at risk based on their participation in accepting phony debt tokens/shady loan products with no backing by the consumer (let's just say the 4% of all mortgages this affects) ? Then let's just at some point say - hey, if you are propped up on 20 billion never to be paid credit card debt (as in sale of consumer debt), let's just start calling your entire inst. one big racked up credit card that you can't handle the interest on.
Greedom
I see this same pattern with oh ? Denver ? Savings and Loan ? Now, where was China to bail out the S&L's that failed. Also, where was HSBC on IndyMac ? So much for my BoC wants into the US, BoC could have picked up IndyMac ? or backed it ? Come on, come to think of it ? China backs the US Dollar to SOME degree, oh wait, no, it backs it BUT it also detracts from it based on US leveraging to China through Treasuries. Hmm - if China is good enough to pay for the Iraqi War then China is good enough to buy out and back institutions like IndyMac Where was China with IndyMac ? It's like that song 'Where were youuuu... Where were youuuuu ' (Foreigner was it ? ) funny HSBC can do this too last I checked (SOME time ago), they were near the top for exposure to sub prime - Where are THEIR Q3 and Q4 losses heh whilst US institutions continue to get pegged at expected Q3, Q4, Q1 2k9 etc... write downs. Hmm - What's HSBC got that say - BS or Lehman's doesn't ? short of even MORE write downs and STILL they/HDBC can go shopping in NYC - and buy institutions that FAILED due to the very same impact HSBC took. Really, I guess HSBC is that much bigger. Took me 2 full hours to find the breakdown of HSBC as to abbreviation last year learning of HSBC. It's one big fat laundering funnel to the West - Tellin' Ya.
Greedom
I forgot to close on my point using say- Enron as an example: Where you have top floor execs saying - "Let 'er burn but get the pension funds out of the building before it burns" Or flat out behind the scenes liquidation. Yes, that's right. I'm suggesting yet another perspective is Lehman and Bear Stearns both knew they were playing with - not toxic waste - but transport channels to allow the company to be cashed in on BACK THEN, and the debt to be passed off NOW.
Greedom
I do say, looking back ? If only we could have guessed Bear Stearns, Lehman - would be falling down as if they were destined to ? We could have shorted them all ! Without that transparency for shorting ? you really can't tell who plants seeds ahead of time can you ? It's almost as if these institutions either demonstrated great carelessness and over leveraging OR flat out incompetence, or ? option C, which just popped in my head - at some point ? at the top super senior level, a tipping point is reached where the executives say - let's push this car over the cliff. ? ? ? We'll get out now, and (heh - CountryWide 2 November's ago CEO ) no one will connect us with it. I like the reference today in the news about HSBC courting Lehman. You know ? Bank of China really wants into the US, I bet the way in is FIRST, get yourself a 1.3 billion office building to organize a HQ. Then again Bank of China IS in the US. I'd LOVE to find a branch and get a card, just to have it in the Chinese, a language I'm finding easier to learn if I approach each and every new symbol with this prefix "I wonder what this one could mean". 26,000 symbols later this WILL pay off ! BoC probably feels the same only they want 26,000 branches world wide ! Either way, I wonder if how quickly Manhattan financial sector becomes China Town all the sooner. That's how you do it too, that's the Hathaway way, even in their case with PetroChina, but China is picking up some great companies at fire sale prices.
Greedom
New employee at cafeteria on floor 37 during an interview process. "oh yeah Bob, yeah, here they have extra extra's - and wait till you see the super seniors package, you'll want to commute all the way in from the Fells". Bob's income ? 2007 1040 ? 7 million ?
Greedom
Wall Street deserves its own company. If only the people invested faith and belief in the dollar as do the hardcore religious fundamentalists invest in ? I don't know. Last I checked, no one had private access to the truth, nor was there an explicit route to it. Odd, the more religious people become as we witness I suppose we can say- the more malleable they were ? are ? Wall Street has turned into give me my piece 10 to 1 and MY share - and maybe even if you work in the sector you can say - and give me an EXTRA MY share, and for yet even fewer, but some can say my Extra Extra share. 7 figures and up. Where can a 26 yr old get 3 million sign on - oh well. I've yet to see the connection properly investigated regarding Dr. Thorp, the MIT mathematics professor who set out to skate black jack, and did so, and published the first book on it, he ALSO according to the documentary I was watching, THEN sought out to approach Wall Street - well - let's face it. He JUST LEFT Reno was it ? I get them all mixed up, I can't even say what state Reno is in, and probably for the better. Maybe we can all say that was a formal beginning for Vegas/Casino mentality brought to Wall Street. well able to automate thought processes using the 'machine' myself, I can't imagine what's become over the years to let software push ahead, sit, stop gap, push ahead, penny by penny.. Like that song Minute by Minute - music wise at least. I am all yea for progressive growth, creative capital, whatever you cant to call it, responsible capitalism, but profit from obfuscated loss - eeks. That's what I treanslate this above mention of 'L said M, N and O will probably report 10 billion blah blah in the next quarters' - something to that regard. I think what we're seeing here with forthrightedness ? is it ? would be like dating Herb Tarlick from WKRP - Herb - one date TWO would reveal his 312k debt from 1983 to present, then on date 3, you'd find out he's being sued and really owes 2x at nearly 750k. Date 4 you'd find out he really owes 12x. ? Let's hope it's not 12x in the end. Otherwise, just imagine if Herb were to walk up to a new potential client schmoozing them, probably with canned caviar, and right off go, Hi, My name is Herb Tarlick, AND I've also got oh ? a total of 83 Billion in write downs foreseeable ? I just think it's not so much shifty for these slowly bled losses - it's like we're in 1823 and someone is 'bleeding' you to 'heal you' - slowly - weakness. Same with these time released capsules of write downs. Now, who at the beginning of any period can predict their corporate losses ? true - no one. However, It's interesting to see totals on write downs. I don't think this author has the tally right either, well, no one can, it's moving as you compute, but still. I say if S&L was over 1 trillion - which I believe it was, let's ask ? If we're seeing 500 billion in write downs, it's a LONG way to go, not even 1/4 just calling the mortgage / sub prime fallout even a TWO trillion. 500 + 500 + 500 + 500 = 2000 billion -if you follow my point. I bet we see far more than 2 trillion fallout from this - globally ? sheesh. Remember, even at 2,3 or 4 % - globally, that's still over 2 trillion. I just meant in the US. I bet we see over 2 trillion, ESP. if S&L THAT far back was over 1 trillion. Watch someone peg it at 4 trillion by 2011. more debt. Little do 21 year old university students know, they are paying off the Savings and Loan losses - My latest realization ? This fallout and loss surpasses the entire Iraq War costs. And yet ? because I think it requires a bit of understanding that the losses are composite- from so many institutions/corporations- people may not 'grasp' how 2 + trillion burden can be placed on them to be paid off through their labor or commerce exchange in taxes.
Kevin McIntee
EMac I'm a huge fan of yours. You are an absolute genius, you've been incredibly accurate and way out in front on so many news items that affect investors. I have a huge amount of respect for you, you've got a ton of integrity. You are one of the rare few in business journalism I listen to, I've been a fan of yours since your days at the Wall Street Journal. Keep up the great work, we need you desperately!
Harish Vembu
Hi/Hello, Nice article of relevance. Sad to hear about the fate of Lehmann Brothers. I have never worked for a Bank. But the current downturn and meltdown of the financial Instituitions prove that there are lot of bubbles waiting to be burst in Financial Sector. Back in India and all around the world we think high about these instituitions. In Modern day market even the big players are shaken to their core. Fundamentals needs to be strong for any organization. Another thing that puzzles me is that KDB has come in for rescue why not anyone from within US or Europe??. Is it because of lack of risk takers locally or something else??. It appears to me that US financial sector is beginning to lose the battle to Asian counterparts. Best Regards