The issue, for anyone who has any shred of a belief in free markets left, is not whether or not the homeowners owe the money. The issue is that the FIRE sector of our economy has been growing by leaps and bounds at the same time that our manufacturing jobs were leaving. As an economy, we were, in fact, growing our labor force, we just weren't hiring them.
Free markets, effecient markets, would have demanded that the labor and expertise necessary to comply with due process of law would be employed. That labor force would quite necessarily be educated, which may require a change in strategy when it comes to starving our education system to death. They would have, for the last 10 years, been building the infrastructure required to properly administer the monster they were all being paid so much to create. They would have been concerned that the court system (which pretty much holds their fate in its hands, at this point) was properly funded, staffed with competent people.
The free market hasn't failed here, the law has. Start a hue and cry about how most of these homeowners are trying to gain a windfall on a technicality RIGHT AFTER you put some serious resources in play to prosecute predatory lending. Worry about the homeowners RIGHT AFTER you open a serious investigation into the rape and pillage of America's finest companies by the Private Equity guys.
Conservatives are always going on about how everything has to have consequences. You buy more house than you can afford, you're going to lose it. That's life. Well, fine. All I ask is that the CEO's and Goldman Partners who skimmed everything off the top leaving an unkempt, broken shell in its wake, have to pay their consequences. If the way to make them pay is through the courts, that works for me.
“We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs — such as a family home — during this period of economic crisis,” Judge Lippman said in a statement. (New York Times, 10/22/10)
"To maximize investment returns, private equity firms often squeeze down costs in the operations they acquire. And some legal experts suggest that could be a factor in the quality of legal documents generated by foreclosure mills." (New York Times, 10/22/10)
"As staggering as the projected stakes are in the housing crisis, at least you can put a number on them. What's incalculable is the psychic cost of a legal system that may well have let banks skirt the law. "The whole financial system is becoming a lot less transparent," says Hernando de Soto, a Peruvian economist who has written on the importance of well-defined property rights. "You can't size up risk anymore."(Business Week, 10/21/10, "Mortgage Mess: Shredding the Dream"
"Bank of America accused executives at Taylor Bean, Colonial and Platinum of having fraudulently schemed to "double- and triple-pledge mortgages and steal assets" to hide their faltering conditions as the housing market declined." Reuters, 10/20/10 "BofA sues FDIC over Taylor Bean mortgage losses"
Thursday, October 21, 2010
Friday, March 27, 2009
Throwing away the baby with the bath water
http://krugman.blogs.nytimes.com/2009/03/27/was-i-unfair/
Yes, of course you're unfair. You're throwing away the baby with the bathwater.
1st. I agree that finance needs to be a much smaller percentage of gdp and that it has been sidetracking our best minds into nonsense.
Securitization is not rocket science and it's benefit was quite specific. For large concentrations of assets looking for a liquid place to park, the residential real estate market in the united states was/is a rich resource. It's one of the largest concentrations of capital in the world.
When we first came up with the idea, big pools of pension fund money were looking for a way to invest in mortgages, but our model of prepayments made them a very difficult cash flow to manage in a portfolio. Who needs an asset that gives you your money back just when it's going up?
On the other hand, giant corporations were very much in need of overnight and short term funds. Liquidity was important to them too.
Rearranging the cash flows of this huge pool of assets so that one party got them earlier and another got them later was logical and productive. Mortgage rates fell to lows of 6 and 7% from highs of 17 and 18%. It broadened the investor base to include the vast pools of funds in pensions and insurance companies. There was some volatility in prepayments, money was lost in 93 when everyone repaid at once, but by and large they have been good assets for investors.
The game for securitization went nuts when leverage went nuts just like everything else. When hedge funds, ballooning with cheap money and leverage came swooshing in for assets, the games began in the securitization market just like it did in the stock market, the housing market, the commercial market, the retail market (just about any market.)
That old world you describe when banks just took in deposits and made loans was made in a world where the fed contrived to keep rates constant. In a world of wildly fluctuating rates and shapes to the yield curve ushered in by Volker, that model has a whole world of hurt built into it. Ask the S&L's. They borrowed short and lent long when short rates soared.
CDS Swaps are at the heart of the mess we're in, complicating it in ways that are incomprehensible, and in a magnitude that we can't even fathom. They are not securitizations, but fraud and at some point someone needs to walk some of these guys down a plank, somewhere.
Yes, of course you're unfair. You're throwing away the baby with the bathwater.
1st. I agree that finance needs to be a much smaller percentage of gdp and that it has been sidetracking our best minds into nonsense.
Securitization is not rocket science and it's benefit was quite specific. For large concentrations of assets looking for a liquid place to park, the residential real estate market in the united states was/is a rich resource. It's one of the largest concentrations of capital in the world.
When we first came up with the idea, big pools of pension fund money were looking for a way to invest in mortgages, but our model of prepayments made them a very difficult cash flow to manage in a portfolio. Who needs an asset that gives you your money back just when it's going up?
On the other hand, giant corporations were very much in need of overnight and short term funds. Liquidity was important to them too.
Rearranging the cash flows of this huge pool of assets so that one party got them earlier and another got them later was logical and productive. Mortgage rates fell to lows of 6 and 7% from highs of 17 and 18%. It broadened the investor base to include the vast pools of funds in pensions and insurance companies. There was some volatility in prepayments, money was lost in 93 when everyone repaid at once, but by and large they have been good assets for investors.
The game for securitization went nuts when leverage went nuts just like everything else. When hedge funds, ballooning with cheap money and leverage came swooshing in for assets, the games began in the securitization market just like it did in the stock market, the housing market, the commercial market, the retail market (just about any market.)
That old world you describe when banks just took in deposits and made loans was made in a world where the fed contrived to keep rates constant. In a world of wildly fluctuating rates and shapes to the yield curve ushered in by Volker, that model has a whole world of hurt built into it. Ask the S&L's. They borrowed short and lent long when short rates soared.
CDS Swaps are at the heart of the mess we're in, complicating it in ways that are incomprehensible, and in a magnitude that we can't even fathom. They are not securitizations, but fraud and at some point someone needs to walk some of these guys down a plank, somewhere.
Friday, January 30, 2009
Somebody, Please, Put this man in charge!
Jesse is on the money and on point. The last time I wanted to hug someone who had created something so beautiful that tears were in my eyes was 30 years ago. Stanley Turrentine in a dive in the village, had the same effect.
You go Jesse.
http://jessescrossroadscafe.blogspot.com/2009/01/are-we-ready-to-change-system.html
It is time to begin serious, and significant, systemic reforms in the financial system.
Maintaining the status quo will be fruitless because the system is broken. Trying to keep it from becoming 'more broken' is a nice short term fix, but we are beyond that now. This has been a long time in the works.
There has been a recent increase in noise from the Congress about changing a system which promotes excessive pay, and encourages the virtual looting of companies, by overpaid management and a corrupt financial system.
Rather than strike at the branches, and call a few individuals up before Congress for their ten minutes of tut-tutting, how about some serious change that cuts to the roots of the crisis?
One potential solution would be to institute a marginal income tax rate of, let's say, 80% at the 30 million dollar level of aggregate income in the AMT, with a significant raising of the minimum levels of income that trigger the AMT to about 4 million in aggregate income. It can graduate from 50% to 80% from the minimum to the maximum. The AMT was always intended to be a safeguard against loopholes for the highest income brackets. We can permit five year income averaging to allow the incredibly lucky to keep a bigger share. But rewarding luck encourages gambling and gaming the system, which is an open door to white collar crime and fraud.
It is time to begin serious, and significant, systemic reforms in the financial system. It is preferable to the historically likely alternatives.
You go Jesse.
http://jessescrossroadscafe.blogspot.com/2009/01/are-we-ready-to-change-system.html
Are We Ready to Change the System?
"The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few, booted and spurred, ready to ride them..."
Thomas Jefferson
It is time to begin serious, and significant, systemic reforms in the financial system.
Maintaining the status quo will be fruitless because the system is broken. Trying to keep it from becoming 'more broken' is a nice short term fix, but we are beyond that now. This has been a long time in the works.
There has been a recent increase in noise from the Congress about changing a system which promotes excessive pay, and encourages the virtual looting of companies, by overpaid management and a corrupt financial system.
Rather than strike at the branches, and call a few individuals up before Congress for their ten minutes of tut-tutting, how about some serious change that cuts to the roots of the crisis?
One potential solution would be to institute a marginal income tax rate of, let's say, 80% at the 30 million dollar level of aggregate income in the AMT, with a significant raising of the minimum levels of income that trigger the AMT to about 4 million in aggregate income. It can graduate from 50% to 80% from the minimum to the maximum. The AMT was always intended to be a safeguard against loopholes for the highest income brackets. We can permit five year income averaging to allow the incredibly lucky to keep a bigger share. But rewarding luck encourages gambling and gaming the system, which is an open door to white collar crime and fraud.
And we have to ask, just how much is enough. Do you really think that having a 30 million dollar per year income is 'not enough?' Are we insane? Yes, allowing people to 'keep what they kill' is ingrained in our psyche by the last 100 years of a steady stream of propaganda, but its time to start thinking about social interaction and the protection of the innocent as well as the glorification of greed.
Yes, this will alarm the "Joe the Plumbers" out there who wish to fantasize about the looting of the system, or have pretensions of being the next American Idol, with a Pavlovian impulse to consider realistic expectations and a middle class life as socialism.
The top 1% of the wealthy Americans do not need additional incentive to take. They are, for the most part excepting the lucky and the idle heirs, psychologically driven to acquire beyond all rational need. What they need is restraint. And they will absolutely hate it.
But since most wannabe billionaires are delusional why let them drag us down under the bus with them? Let's stop legislating for the .1% probability, leaving the garden gate open for the pigs to come in.
We cannot continue to build and maintain this country if the most rewarding pursuits are gambling, gaming the system, fraud, and white collar crime. That game is over. We're done.
Reform the accounting rules for acquisitions and goodwill, inventory writedown with subsequent earnings effects. "Earnings management" is a tool of the price manipulation for stock option bonuses that is a source of market distortion.
Bring back Glass-Steagall. Let Goldman and Morgan get into the conventional banking business after passing through receivership. The point is to be solvent first BEFORE you get government support. And if you are not solvent we will help you become so through liquidation.
Back up the individuals, the savers and pensions, to the hilt, 100%, and put the financial institutions through the wringer, if not a meat-grinder. Stop beating this 'trickle down' approach in curing our problems by throwing money at the uber-wealthy and corporations. It does not work. It will not work. It is destroying our country.
Oh no, we cannot let honest people be limited in acquiring enormous wealth. Well, there probably aren't many completely honest people pulling down over 30 million per year in income. The criminal prosecution system is also horribly compromised, and we can fix it AFTER we stop the looting, and then the rules can be relaxed.
Direct the FBI and Justice Department to conduct a serious investigation of naked short selling and price manipulation. That aspect of the market is an open sore.
Institute aggregate position limits in commodities, and make them high enough so that they do not bother any legitimate speculators.
Refuse to admit any nation into the favored nation status unless their currency is open for trading on the world markets, free of pegs.
Stop the system of legalized bribery of the Congress and the Executive by lobbyists. That requires campaign funding reform, then let's do it now.
Stop selling this country short for the sake of 'competitiveness' and a perverted image of the "American Dream." If the Founding Fathers came back they would not be able to stop throwing up at what we now call 'freedom' and what we have done with their legacy for which they pledged their lives and sacred honor.
Europe needs to tell the Brits and the Yanks to piss off, fix the euro, take an enormous dose of humility, reform their financial system, and don't play the fool again so easily. Asia needs to take care of its own and grow a middle class, and stop treating its people as coolies. Australia needs to go walkabout with Europe. The Mideast is its own worst enemy. Africa is the shame of our world.
Too radical? Then you're not ready yet for the changes that are required to end this cycle of boom, loot and bust.It is time to begin serious, and significant, systemic reforms in the financial system. It is preferable to the historically likely alternatives.
Thursday, December 18, 2008
OPM (Other People's Money)
We have said repeatedly that one of the triggers for the crisis was permitting investment banks to go public (prior to 1970, no NYSE member firm could be listed). We had dinner with one of our long-standing colleagues who was responsible for Sumitomo Bank's investment in Goldman Sachs and had (and continues to have) close and frequent dealings with the firm. He said that the change in the firm's behavior after it went public was dramatic. Before, it would deliberate (one might say agonize) important business decisions,. Waiting two years to enter a new field was not unheard of. But after the partners cashed in and were playing with other people's money, the firm quickly became aggressive in its use of capital in expanding the size and scope of its activities.
http://www.nakedcapitalism.com/2008/12/new-york-times-story-pulls-punches-on.html
http://www.nakedcapitalism.com/2008/12/new-york-times-story-pulls-punches-on.html
Sunday, October 12, 2008
It Really Sucks to be Rich right now
http://www.bloomberg.com/apps/news?pid=20601109&sid=aIAWDrA4RSTQ&refer=home
Abramovich, Deripaska, Oligarchs Lose $230 Billion (Update1)
By Yuriy Humber, Greg Walters and Maria Kolesnikova
Oct. 10 (Bloomberg) -- Russian billionaires from aluminum magnate Oleg Deripaska to soccer-club owner Roman Abramovich lost more than $230 billion in five months during the nation's worst financial crisis since the 1998 default on its debt.
The combined wealth of Forbes magazine's 25 richest Russians tumbled 62 percent between May 19 and Oct. 6, based on the equity value of traded companies and analysts' estimates of closely held assets they own. The loss is four times larger than the fortune of the world's wealthiest man, Warren Buffett.
Moscow's benchmark Micex stock index declined 61 percent since its peak in May. The global credit seizure, war with Georgia and falling commodity prices led foreign investors to pull $74 billion out of Russia since early August, according to BNP Paribas SA. While Russia's 1998 default and devaluation of the ruble eradicated savings for most of the population, this year's losses are wiping out its richest citizens' fortunes.
``There was a massive transfer of wealth into the hands of the oligarchs in 1998,'' said Mark Mobius, executive chairman of Templeton Asset Management Ltd., which has about $30 billion in emerging market stocks. ``Now it's going the other way.''
United Co. Rusal's Deripaska, 40, the richest Russian on the list, lost more than $16 billion and in the past week ceded stakes in Hochtief AG and Magna International Inc. Chelsea FC owner and Evraz Group SA shareholder Abramovich, 41, lost $20 billion, based on assets excluding property and cash.
Lisin's Losses
The biggest loser has been Vladimir Lisin, 52, an avid hunter and head of Russia's Shooting Club, whose 85 percent stake in OAO Novolipetsk Steel lost $22 billion in value in the period.
Novolipetsk rival Evraz declined 83 percent, shrinking 49- year-old founder Alexander Ambramov's fortune to $2.2 billion from $13.4 billion. Russia's biggest steelmaker, OAO Severstal, also fell, cutting the wealth of chief executive officer and majority owner Alexei Mordashov, 43, to $5.3 billion.
``They should take us all off the Forbes list,'' said Alexander Lebedev, ranked 39th by the magazine in May with $3.1 billion of wealth. Lebedev, 49, who owns 30 percent of state-run airline OAO Aeroflot, said in an interview on Sept. 23 that ``silly'' rhetoric by the Kremlin over the conflict in Georgia was responsible for 40 percent of the stock market's drop in August.
Lukoil, Alfa
OAO Lukoil Chief Executive Officer Vagit Alekperov, 58, saw his 20 percent stake in Russia's second-biggest oil producer decline to $7.2 billion from $19.5 billion. The fortune of Alekperov deputy Leonid Fedun, 52, declined to $3 billion from $8.4 billion. Both men have said they will continue to buy more Lukoil shares.
Dmitry Rybolovlev, 41, who controls OAO Uralkali and owns 20 percent of OAO Silvinit, the country's only potash producers, lost about $12.8 billion, leaving him with $4.1 billion.
Alfa Group partners Mikhail Fridman, 44, German Khan, 46, and Alexei Kousmichoff, 45, ranked seventh, 10th and 17th, respectively, lost at least a combined $12.1 billion.
Alfa's shareholdings include BP Plc's Russian oil venture TNK-BP, mobile-phone operators OAO VimpelCom and Turkey's Turkcell Iletisim Hizmetleri AS, supermarket chain X5 Retail Group and television broadcaster CTC Media Inc.
Spokespeople for companies including Deripaska's Basic Element, Evraz, Nikolai Tsvetkov's UralSib Financial Corp. and Rybolovlev's Uralkali declined to comment on the losses.
Cashing Out
At least one of Russia's wealthiest got out in time.
Mikhail Prokhorov, 43, sold his 25 percent stake in OAO GMK Norilsk Nickel to Deripaska's Rusal for an undisclosed amount in April, just before nickel prices began to slump. The value of that stake plummeted from $13 billion on April 24 to $3.38 billion on Oct. 6.
Prokhorov received $7 billion in cash as part of the Norilsk transaction, the Kommersant and Vedomosti newspapers reported then, citing unidentified people familiar with the deal.
``Are you criticizing me for feasting amid the Black Death,'' Prokhorov joked with reporters in Moscow on Sept. 30, after buying half of Renaissance Capital for $500 million. That was less than a quarter of the value the investment bank had a year ago when VTB Group sought to take it over, according to a Vedemosti report. ``Crisis time is a peak for opportunities,'' Prokhorov said. ``An absolute peak.''
Trading Delayed
Russia's Micex and RTS stock exchanges delayed the opening of trading today on orders of the market regulator. It was unclear when trading would start, a spokesman for Micex said. The RTS won't resume stock trading until ``further notice,'' the bourse wrote in an e-mailed statement.
``You can now buy the free float of the entire Russian energy sector with the market cap of Coca-Cola, and still have change to buy all the Russian banks,'' Merrill Lynch & Co. emerging markets equity strategist Michael Hartnett said in a note to clients today.
The unprecedented loss of wealth may set the stage for a new round of asset redistribution, said Pavel Teplukhin, president of Troika Dialog Asset Management in Moscow.
``We've seen quite a significant inflow of fresh money by our wealthy individuals to acquire at these very attractive levels that we haven't seen since 2003, 2004,'' Teplukhin said in a Bloomberg Television interview on Oct. 9, a day the Micex Index climbed 9.8 percent.
Next Round
The next round of wealth building may be the most intense yet, according to Renaissance Capital. The first came between 1995 and 1998 as Russia's first president, the late Boris Yeltsin, agreed to sell stakes in the nation's biggest industrial assets in return for loans from bankers including Potanin, who helped organize the state bailout.
``It will be a game with bigger stakes than in early 1990s privatizations and the redistribution after the 1998 crisis,'' said David Aserkoff, chief strategist for Russia at Moscow-based Renaissance Capital.
``Oligarchs with cash will be able to use their knowledge of the business and political landscape to find the next billions,'' Aserkoff said in a research report on Oct. 6.
``The market will grow back,'' billionaire Viktor Vekselberg, 51, one of BP Plc's four partners in oil company TNK-BP and founder of Renova Group, told reporters yesterday. ``The only issue is when. I don't think it will be soon.''
To contact the reporters on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net; Greg Walters in Moscow gwalters1@bloomberg.net; Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net. Last Updated: October 10, 2008 05:44 EDT
Abramovich, Deripaska, Oligarchs Lose $230 Billion (Update1)
By Yuriy Humber, Greg Walters and Maria Kolesnikova
Oct. 10 (Bloomberg) -- Russian billionaires from aluminum magnate Oleg Deripaska to soccer-club owner Roman Abramovich lost more than $230 billion in five months during the nation's worst financial crisis since the 1998 default on its debt.
The combined wealth of Forbes magazine's 25 richest Russians tumbled 62 percent between May 19 and Oct. 6, based on the equity value of traded companies and analysts' estimates of closely held assets they own. The loss is four times larger than the fortune of the world's wealthiest man, Warren Buffett.
Moscow's benchmark Micex stock index declined 61 percent since its peak in May. The global credit seizure, war with Georgia and falling commodity prices led foreign investors to pull $74 billion out of Russia since early August, according to BNP Paribas SA. While Russia's 1998 default and devaluation of the ruble eradicated savings for most of the population, this year's losses are wiping out its richest citizens' fortunes.
``There was a massive transfer of wealth into the hands of the oligarchs in 1998,'' said Mark Mobius, executive chairman of Templeton Asset Management Ltd., which has about $30 billion in emerging market stocks. ``Now it's going the other way.''
United Co. Rusal's Deripaska, 40, the richest Russian on the list, lost more than $16 billion and in the past week ceded stakes in Hochtief AG and Magna International Inc. Chelsea FC owner and Evraz Group SA shareholder Abramovich, 41, lost $20 billion, based on assets excluding property and cash.
Lisin's Losses
The biggest loser has been Vladimir Lisin, 52, an avid hunter and head of Russia's Shooting Club, whose 85 percent stake in OAO Novolipetsk Steel lost $22 billion in value in the period.
Novolipetsk rival Evraz declined 83 percent, shrinking 49- year-old founder Alexander Ambramov's fortune to $2.2 billion from $13.4 billion. Russia's biggest steelmaker, OAO Severstal, also fell, cutting the wealth of chief executive officer and majority owner Alexei Mordashov, 43, to $5.3 billion.
``They should take us all off the Forbes list,'' said Alexander Lebedev, ranked 39th by the magazine in May with $3.1 billion of wealth. Lebedev, 49, who owns 30 percent of state-run airline OAO Aeroflot, said in an interview on Sept. 23 that ``silly'' rhetoric by the Kremlin over the conflict in Georgia was responsible for 40 percent of the stock market's drop in August.
Lukoil, Alfa
OAO Lukoil Chief Executive Officer Vagit Alekperov, 58, saw his 20 percent stake in Russia's second-biggest oil producer decline to $7.2 billion from $19.5 billion. The fortune of Alekperov deputy Leonid Fedun, 52, declined to $3 billion from $8.4 billion. Both men have said they will continue to buy more Lukoil shares.
Dmitry Rybolovlev, 41, who controls OAO Uralkali and owns 20 percent of OAO Silvinit, the country's only potash producers, lost about $12.8 billion, leaving him with $4.1 billion.
Alfa Group partners Mikhail Fridman, 44, German Khan, 46, and Alexei Kousmichoff, 45, ranked seventh, 10th and 17th, respectively, lost at least a combined $12.1 billion.
Alfa's shareholdings include BP Plc's Russian oil venture TNK-BP, mobile-phone operators OAO VimpelCom and Turkey's Turkcell Iletisim Hizmetleri AS, supermarket chain X5 Retail Group and television broadcaster CTC Media Inc.
Spokespeople for companies including Deripaska's Basic Element, Evraz, Nikolai Tsvetkov's UralSib Financial Corp. and Rybolovlev's Uralkali declined to comment on the losses.
Cashing Out
At least one of Russia's wealthiest got out in time.
Mikhail Prokhorov, 43, sold his 25 percent stake in OAO GMK Norilsk Nickel to Deripaska's Rusal for an undisclosed amount in April, just before nickel prices began to slump. The value of that stake plummeted from $13 billion on April 24 to $3.38 billion on Oct. 6.
Prokhorov received $7 billion in cash as part of the Norilsk transaction, the Kommersant and Vedomosti newspapers reported then, citing unidentified people familiar with the deal.
``Are you criticizing me for feasting amid the Black Death,'' Prokhorov joked with reporters in Moscow on Sept. 30, after buying half of Renaissance Capital for $500 million. That was less than a quarter of the value the investment bank had a year ago when VTB Group sought to take it over, according to a Vedemosti report. ``Crisis time is a peak for opportunities,'' Prokhorov said. ``An absolute peak.''
Trading Delayed
Russia's Micex and RTS stock exchanges delayed the opening of trading today on orders of the market regulator. It was unclear when trading would start, a spokesman for Micex said. The RTS won't resume stock trading until ``further notice,'' the bourse wrote in an e-mailed statement.
``You can now buy the free float of the entire Russian energy sector with the market cap of Coca-Cola, and still have change to buy all the Russian banks,'' Merrill Lynch & Co. emerging markets equity strategist Michael Hartnett said in a note to clients today.
The unprecedented loss of wealth may set the stage for a new round of asset redistribution, said Pavel Teplukhin, president of Troika Dialog Asset Management in Moscow.
``We've seen quite a significant inflow of fresh money by our wealthy individuals to acquire at these very attractive levels that we haven't seen since 2003, 2004,'' Teplukhin said in a Bloomberg Television interview on Oct. 9, a day the Micex Index climbed 9.8 percent.
Next Round
The next round of wealth building may be the most intense yet, according to Renaissance Capital. The first came between 1995 and 1998 as Russia's first president, the late Boris Yeltsin, agreed to sell stakes in the nation's biggest industrial assets in return for loans from bankers including Potanin, who helped organize the state bailout.
``It will be a game with bigger stakes than in early 1990s privatizations and the redistribution after the 1998 crisis,'' said David Aserkoff, chief strategist for Russia at Moscow-based Renaissance Capital.
``Oligarchs with cash will be able to use their knowledge of the business and political landscape to find the next billions,'' Aserkoff said in a research report on Oct. 6.
``The market will grow back,'' billionaire Viktor Vekselberg, 51, one of BP Plc's four partners in oil company TNK-BP and founder of Renova Group, told reporters yesterday. ``The only issue is when. I don't think it will be soon.''
To contact the reporters on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net; Greg Walters in Moscow gwalters1@bloomberg.net; Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net. Last Updated: October 10, 2008 05:44 EDT
Thursday, October 9, 2008
Relief
Maybe i'm crazy, but i feel better now than before. I was on the trading floor in the crash of 87, and life didn't change a whole lot. (not that i don't think this is a LOT bigger deal). I don't want to link all this, but i feel better because
- the air is finally coming out of the equity bubble.
- the air is coming out of the income disparity bubble
- paulson is getting the message of the right way to use the 700 billion
- he seems to have the authority to do so
- europe is in worse shape than us, leveraged more and it is all a game of relative
- oil is down.....oil is down....oil is down.... that is so good for business in america
- income for the oil producing economies is down
- depression hurts china more than us (i have nothing to back this up but instinct)
Hubby is mortified that his 401k is down. All asset classes are getting re-evaluated. No one could really predict which ones come out on top, so to a great extent it's really random where you're standing right now.
Obama is probably going to end up being the best man for his time. Read something that he is in negotiations for a half hour block of time. That's perfect. Reassure a worried nation. He's very smart and style may matter more than substance for the next 4 years. Substance will be all around him.
Obama might win. We might have control of all three branches.
The opportunities are insane.
Remember to Breathe
The dow at 8579. Between the hedge funds liquidating, the cds swaps trying to settle, a lack of shorts in the market to cover, a lack of traders willing to trade, (Does anyone else wonder what all those masters of the universe at the investment banking trading desks are doing these days? They have to be exhausted, not to mention the strain of wondering if you have a job, who you work for, whether or not your cash is in insured deposits...) that last little drop was a doozy.
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