S & P Know Nothings
If it wasn’t so scary, it would be almost comical. Yesterday afternoon Standard and Poors (S&P) put out a statement that “the end of write-downs is now in sight for large financial institutions.” This morning Bear Stearns asked the Fed for an emergency bailout.
Our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations.
Though rating agencies like S & P promise “to supply investors with independent benchmarks to feel more confident about their investment decisions”, it’s clear they are either in the tank to the big banks that pay their fees or they see themselves as cheerleaders for the Fed and the Treasury Department. Clearly any investor stupid enough to believe S & P’s press release yesterday and bought some of that “undervalued” Bear Stearns stock yesterday afternoon, would have lost more than 50% of his investment by 10 AM this morning.
Yesterday afternoon Treasury Secretary Paulson announced the Bush Plan to fix the crisis. Did he take any bold action to rein in agencies like S & P that put AAA ratings on junk mortgage bonds? No way.
But in many ways, the plan relies on the same market participants — from mortgage brokers to credit-rating agencies and Wall Street firms — that government officials and other experts blame for the current crisis. Bristling at Democratic complaints that the plan was too light and that the administration was fundamentally hostile to taking bolder steps, he (Paulson) declared, “I am not antiregulation.” But he said the administration had to be careful and not do anything that would be overly burdensome to markets at a time they are already under considerable stress.
God forbid that we would burden stressed out S & P with any notion that they actually understand the collateral of the exotic derivatives the masters of the universe at Bear Stearns cooked up. Now of course “The Bear” is going to have to unload some of those geniuses, since they have run out of cash to pay them. Not to worry. The Bill Collector business is in a hiring frenzy and is working hard to improve its image.
They are pushing consumer tips on the ideal way to respond when a collector comes calling (basically: pay up). They note that debt collecting is an old American tradition. (Abraham Lincoln was a debt collector, some histories say.) They point out how, in a time of rising unemployment, they are hiring.
The only debt collection I know Lincoln did was for postage due on letters. There’s a story about how the regional manager came down to collect the sum. His friend was about to loan him the few dollars because he was afraid Lincoln (who was in a pretty tight financial situation at the time) might have already spent it. But just in time, Lincoln took out an old sock filled with pennies and other small coins (the very same coins that the people had used to pay) and handed it over.
Fundamentally different than the marginal lenders.
Strange that this is being discussed as I recall a story about Lincoln the debt collector as well, in that as a postage collector he had one troublesome customer who refused to pay a years debt claiming Lincoln would steal it, which led Lincoln to criticize the citizen in the local paper till he apologized and paid up.
Speaking of debt collection, you might enjoy this list of Carlyle Capital’s (rumored) creditors. Bear has distinguished company. There are other Carlyles and other Bears lurking in the woods.
STS-All the big boys wanted a piece of that credit. And now they’ve got the whole company.
I’ve tried to convince leaders of the gay community for years that they should appropriate President’s Day – as the national gay holiday. I think it markets itself:
1. Abe was gay.
2. On the penny, abe faces the opposite direction, of the other presidents on US coins. So the motto is, “you have you’re two cents, we’ll have our one.”
3. As the third Monday in February, it is ripe for three-day weekend travel. The travel industry would totaly support a gay holiday.
4. We call it, “Pesident’s Gay.”