Perry Glasser

Dollar$ Buccaneer Award!

In Politics, Wall Street on October 6, 2008 at 8:13 am

Sometimes, all you can do is hold your nose and look away.
Today’s Wall Street Journal does an effective, lucid investigative report on the machinations of Richard Fuld Jr., the CEO of Lehman Brothers. Mirabile dictu! they’ve got it on page 1.
Fuld, a First Rank Buccaneer, set his company sailing on the unregulated sea of credit swaps, those derivatives that are really insurance policies written to guarantee repayment of loans that do not exist. They are unregulated because the Wizards who cooked them up scrupulously engaged a rhetorical dodge: to never, ever use the word “insurance.” To do so would invite (gasp!) Federal regulation, and how could they make a buck with the Fed looking over their shoulders?
With Federal Weasels praying at the Holy Church of the Open Market, such shennanigans are blessed.
See… with a credit swap you insure a borrower’s ability to pay off a loan. Derivatives are a hedge against wide price swings on a real underlying asset, right? But with credit swaps, we abandon the underlying asset, those uncreditworthy loans flooding the market from 2001- 2007 (aka: subprime) because real assets, especially risky ones that may not perform, are an impediment to our making HUGE dollars REALLY quickly. Instead, we trade in the naked derivative! No asset! Just the idea of the asset, and just as if a real underlying asset existed, since derivatives are leveraged, we can sell those derivatives.
We can sell the crap out of them! Package ’em! Sell ’em to pension funds! Sell ’em to municipal governments! Sell them to slow-moving investors with deep pockets and serious fiduciary responsibilities! Sell them to slow-moving investors because as Buccaneers, we can have our computer algorithms turn on a dime and leave those sorry bastards floundering in our wake!
How many billions can we sign you up for? Heck, the swap is written against Fannie Mae and Freddie Mac, so what can go wrong? Sign here, kid…
Better than Girl Scout cookies.
The FBI is now investigating Buccaneer Feld. It seems they frown upon utterances about Lehman’s liquidity and strong balance sheet issued to shareholders on Sept 10, the day AFTER Buccaneer Fuld was turned down for desperately needed cash by the Bank of America, HSBC (Hong Kong, Shanghai Bancorp) representing the ruler of Dubai, and the sovereign wealth fund of China, the China Investment Corp. Fuld was trying to sell Lehman’s notes to entities already choking on American paper issued to finance Weasel-in-Chief Georgie’s War on Goatherds Who Need Democracy.
The Journal’s investigative team, Mollenkamp, Craig, McCracken and Hilsenrath deserve fan mail. Read the article.
Right after you read it, maybe, OK ,OK, we should wait for the FBI, but Dollar$ likes to plan.
Richard Fuld Jr., stand! You, sir, deserve Dollar$ Buccaneer Award!!
Who will bring the pitchforks? Who has the torches? Tar? Feathers? Come on now, don’t be shy!

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