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Clinical Proof Of Banker Psychopathology: Repo 105's "Pimply" Importance To A Few Managing Directors' Lehman Equity Stakes
What is $50 billion between a couple of psychopaths? It's basically “a drop in the ocean” according to Max Abelson's account of how the Repo 105 fiasco is seen by the other side. Several ex-Lehman bankers speak off the record in "The repo men's new Lehman shrug" and confirm that not only is Wall Street terminally deluded in its own self-importance, but that basically everyone in finance is a megalomaniac, with no sense of relative worth, or any worth, for that matter, unless it goes straight into their back pocket. “I’m like, whatever" says London managing director #1, when asked what his reaction to the Repo 105 disclosure is. So when is it not "whatever?" $500 billion? $500 trillion? In its pursuit of finding ever more complex ways of defrauding the middle class silly (without the latter even being aware its share of net global wealth is about to decline from 1% to half that), Wall Street's bankers have passed the clinical psychopathology barrier, and will stop at nothing to destroy the wealth of everyone else not only with impunity, but with a smirk and a smile. Now that's net worth change you can believe in.
Steep yield curves, unfathomable derivatives, off balance sheet gimicks, repo XYZ: all these serve simply to push off ever more private risk into the public domain (via the TBTF or otherwise moniker) while Wall Street collects its 3-5% from each transaction, and has an infinite pool of zero interest money courtesy of its biggest lackey - the Fed. People ask - so who is the idiot on the other side of every offer ever higher into this 65% rally? Why you dear taxpayer, that's who. And you are paying for it with either certain eventual hyperinflation which will leave you broke, or certain eventual hyperdeflation which will destroy the entire system as one firm after another go under, until the very US is bankrupt. Heads you lose, tails you lose. And all the time the deranged egomaniacs quoted in Abelson's piece are laughing to the bank.
And to guarantee that sooner or later an ever more indignant and furious public, finally takes to the pitchforks and sawed-offs, lines like these are sure to seal the deal:
The only people who would worry about using an old trick to reduce
leverage from 13.9 to 12.1, the second executive said, are “yappers who
don’t know anything.” Both executives think of Repo 105 as a minor detail that was played up
by a lawyer who needed to justify a report whose cost had run to $38.4
million. “When you spend what you did on this report, and you go
through a firm for a year, and this is all you find? That’s amazing,”
the first said.
Of course, the irony is that these presumed BSDs ridicule the system, yet end up losing their entire equity stakes in the only financial firm so far to liquidate. And the next bank to go tits up and want America's compassion? The public will be, like, whatever. Just before the ultraviolence begins that is.
It is also notable that their arrogance is only matched by their resentment of fellow firm Goldman Sachs (which last time we checked was not trading at about $0.00 on the pink sheets). Just a little squid envy boys?
“If Valukas went into Goldman Sachs, what do you think the report would
look like?” the first asked, referring to the court-appointed examiner,
Chicago attorney Anton Valukas. “This would be a fairy tale compared to
that.”
We'll leave this sordid tale of jealousy and psychopathology alone, suffice it to say that even though Goldman noted that it has never engaged in Repo 105s (duh, of course not - these were a Lehman specific off balance sheet construct), what the right question to ask is whether the firm ever engaged in transactions that were "Substantially Similar." Yes, that is a legal term, and yes, Goldman will have a much tougher time going on the record refuting that particular question. And with ZH going restricted on the last tangent quite soon, we hope that others will continue the good fight of pursuing just how high (Tim Geithner, wink, wink) the stench of criminality goes. Yes, no matter how you frame it, you don't have to be a (securities) lawyer to know that 10(b)-5 breach is a criminal in every world. Even Wall Steet's.
p.s. With regards to the post's title, we wish Mr. Abelson had asked the Lehman bankers how much of their collective net worth the firm's persistent fraud ultimately ended up flushing down the drain.
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We are doomed. The entire financial and political system is owned by the crooks. The only way it is going to change is after a systemic collapse and we are on a runaway freight train to that.
I beg to differ. The "We are doomed" mentality is that of a slave, a victim, someone powerless, usually by their own hand. If we are doomed, it is not because of anything that is being done to ourselves, it is because of what we are not willing to do for ourselves.
"Wall Street's bankers have passed the clinical psychopathology barrier, and will stop at nothing to destroy the wealth of everyone else not only with impunity, but with a smirk and a smile."
Sorry. Amerika's fresh out of Superheros
Everybody knows:
http://www.youtube.com/watch?v=wh9AC0jCGjY
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows
Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that you've been faithful
Ah give or take a night or two
Everybody knows you've been discreet
But there were so many people you just had to meet
Without your clothes
And everybody knows
Everybody knows, everybody knows
That's how it goes
Everybody knows
Everybody knows, everybody knows
That's how it goes
Everybody knows
And everybody knows that it's now or never
Everybody knows that it's me or you
And everybody knows that you live forever
Ah when you've done a line or two
Everybody knows the deal is rotten
Old Black Joe's still pickin' cotton
For your ribbons and bows
And everybody knows
And everybody knows that the Plague is coming
Everybody knows that it's moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But there's gonna be a meter on your bed
That will disclose
What everybody knows
And everybody knows that you're in trouble
Everybody knows what you've been through
From the bloody cross on top of Calvary
To the beach of Malibu
Everybody knows it's coming apart
Take one last look at this Sacred Heart
Before it blows
And everybody knows
Everybody knows, everybody knows
That's how it goes
Everybody knows
Oh everybody knows, everybody knows
That's how it goes
Everybody knows
Everybody knows
Leonard really nailed it on that song.
And many others
(Currently on world concert tour at age 75)
I'll tell you what I "know", based on conversations with many close friends, colleagues, and people I barely know:
1) Since Ben went on his "free money for bankers, fuck the savers" zero interest policy, EVERYBODY I know feels a whole lot poorer
2) Even those with mortgages that refi'd at a lower rate, feel POORER
3) Everyone is very dissatisfied with the way things are, and the way they are going
4) Nobody is buying stocks
5) More people are pulling cash from banks and keeping it in the home/safe, what very little they have in most cases
6) People are downright fuckin strapped for cash, many struggling paycheck to paycheck, with debt already having accumulated
And these mother fuckers claim "victory" over Great Depression no. 2 and "recovery" in the works?? Not in the real world maties.
I really hope these guys (Geithner, Bernanke, Summers, Pelosi, Obama, Rahm) are running the show when things go BUST the next time, as the finger will point straight this time around.
Great comments. However, as for the finger pointing straight this time that simply will not be the case. There is a long long line to point to and the 6 you named are not the only ones responsible by any means.
We cannot remove Alan Greenspan, Robert Rubin, Hank Paulson, G.W. Bush, Bill Clinton--oh hell, the list goes back so far because debt bubbles take decades to be created.
One must not forget the toxic waste is still there in the myth to market accounting world and still sitting on the books. It isn't magically healing itself since 1 in 4 mortgages in this country are underwater and certainly haven't been reworked. In fact, most toxic assets of the mortgage realm have just deteriorated further since people have a) walked on the mortgage so they get sold at a loss by the banks, b) in the short sale world most deals take up to a year if not more because the guys holding the seconds (hello JPM, WFC) refuse to let the deals get done or c) just plain aren't paying.
You are right Howard, I would get tired typing if I had to name them all. Greenspan, Rubin, and Paulson......3 heads that should roll for sure.
Howard, Sometimes they get sold at a loss, and then, even though the banks in question bought them (via FDIC take over) at the distressed price, the FDIC is giving them the difference between the price they sold it for and the price they original bank made the loan for.
House foreclosed-->Bank #1 fails-->new bank (#2) buys bank 1 with FDIC backstopping (with lower price for the foreclosed house(s))-->bank #2 sells house-->turns in bill to FDIC for original price bank 1 marked it at, indicating a loss to be reimbursed for, even though they did not buy it at bank #1's original price. You and I get to pay for that little rip off. And no one is doing shit to protect us from the rape.
http://www.youtube.com/watch?v=2xAJVri2a1U
Loved it!
Howard, we are all on the list one way or another. The whole of the system is for all intents and purposes, inescapable in the current context. Fact remains that more and more folks are not only feeling poorer as Steve so ably communicates, but that the whole of the system is indeed beyond hope and that there needs to be a settlement process put into place. And not in the medium term when this round of false white knightism has passed in what many suspect cannot but be total and abject failure. Confidence, duty & responsibility is being called to the questions of our age and the various segments of our society are having to present their answer.
Eloquently put.
Thank you MsC... truth, expressed by a great artist!
Here's my fight song...
Liberty by Jordon Page...It's wonderful and inspiring, please give a listen.
http://www.youtube.com/watch?v=Bitxwy6okn4&feature=player_embedded
Nice voice and elegant in its simplicity.
What do you guys expect.
I run a con, you know it's a con, the government knows it's a con. In fact the chief con men are running the government. It doesn't matter what you say, or what you want. I keep getting away with it. Of course I'm going to be smug.
That is the thing under my skin. I think you should be afraid of me.
I teach. I had two students cheating on their tests with each other (other students came to me saying one was bragging publicly about it). When they took their next test, I publicly seperated them. One girl was wide eyed and crying as she moved to the back of the room. The other one smiled and, brace yourself, burped at me.
You know I handled each bitch a little differently, don't you? "You" should really be afraid, and you're not, and that is when the gloves will come off.
No quarter for sociopaths. When there are so many running around, even though I am not an advocate of the death penalty, it just isn't efficient to jail them all or try to rehab them when you know the truth of the situation is they cannot change. Just not enough time with that much chaos going on.
eh dcb?
The thing is that this condition is not only circulating within the various professions, but has become deeply rooted and those root systems are mixing. Having worked the industry I can say from direct observation that there is rarely such a thing as genuine rehabilitation and so I agree that those who would willingly destroy the very fabric of civil society richly deserve every bit of exposure that is coming their way. Exposure is a part of what resolution programs are all about. Without it resolution is deferred.
Screen Some Rot
The control system is 20 layers deep and we are all a part of it. For many, just going to work perpetuates the control system. I know that is a simplistic statement and I plan on expanding on this thought in another article. But "we the people" are the control system just as much as Bernanke, Obama, Congress, whomever you wish to name.
Spot on. And making an adjustment to sustainability will cause hardship for everyone. As long as folks are willing to empower others those others will act with that implied power.
Lehman's "#1" in London may very well have committed fraud by facilitating these transactions which occured in London. I expect him to be standing tall before the Man in the near future. We shall see if he's still smug at the extradition hearing.
" . . . When you spend what you did on this report, and you go through a firm for a year, and this is all you find? That’s amazing,” the first said.
What's also amazing is that the majority of the "uninformed" public assume prodigious corruption on Wall Street is the norm.
Everybody knows. Sure, there have arguably been more corrupt societies, but can anybody think of a more hypocritical one?
even the investigations are money makers.
I am for planting more veggies at home.
I am for sharing with my neighbors.
I am for using less.
I am for Being more.
Irs and the rest of the government can get pickled.
pretty easy to be a smug 'former Lehman executive' when your name is #1, #2 or #3.. plop your name down and then tell us you 'giggle' when you think about these numbers.. big difference.
Between this article and the market 'pop' this afternoon I came very very close to calling it an 18 year career. Instead I went for a walk, had a coffee, came back and e-mailed this article to every single person I know.
The more people who see this attitude and hear about the abuse the better.
and then when the SHTF and these ex-LEH ex's are crying as the judge hands down their sentences.. I will be the one giggling.
its called karma bitches..
There isn't going to be any judges . These guys are teflon dons and it is obvious by their attitudes . If they get prosecuted every firm on wall st. will have to be prosecuted as well . That is why these guys are so smug because they know that everyone is playing these games even today and the FED and the SEC back them as well . Everybody is afraid to prosecute the lies/corruption because it is so ingrained at this point everything big and small will fail as a result . The tipping point will come when people can't feed their children or when they cant buy them new cars when they turn eighteen .People have come to expect a certain standard of living if it is taken away they will eventually revolt . Me I am getting as far away from that crap as soon as I can . I don't want to be around when the sheep realize they been slaughtered as well as their lambs for generations to come .
We must guard this nation against all enemies, both foreign and domestic.
And our biggest enemy is not Iran.
"Yes, that's right. I'd like to buy a round of polonium cocktails for everyone in the country club bar. No, no just tell them it's from an old friend."
Welcome back DaddyWarbucks. Always enjoyed your comments. Stick around, it keeps getting more amazing and fucked up hourly. Who needs television when you can watch the documenting of the fall of empire, LIVE.
Seriously, glad to see you.
http://www.youtube.com/watch?v=QVS3WNt7yRU
Shipping Indices Highlight a Potential Commodities Sell Off
http://www.oilprice.com/article-shipping-indices-highlight-a-potential-commodities-sell-off.html
It is clear to me that our government is corrupt. Given that, I don't see why anyone would give them power by respecting their currency. Maybe there is a glut of commodities, but do you really want to hold dollars instead? I don't get it.
I should probably not comment, but it seems to me that people are still trying to prop the whole thing up by playing the game. Or worse, they still believe in the game. We who hang out here pretty regularly are Nihilists, we have systematically shattered all our belief systems, and now that our consciousness is mostly out of it, we look back and go "but how can you believe?"
I am not in any way trying to position myself as superior. In fact I am inferior and announcing it. I am only in Nihilisim. I don't have the ability to look back and remember when I believed and position myself there and then start trading based on being able to read the herd. None of it makes sense to me. But looking for it to make sense is gonna kill the Bear types, I see that daily on this blog. It does not make sense, because it never did. You don't believe. You are left with nothing. Others still have something and they trade that. A few, I think maybe gifted traders, remember having "something" other than Nihilism, can put themselves in the role, and trade it.
I would never dream of trying. I would never dream of trying to find an explanation for all the trading I see. It looks fear driven and neurotic to me, desperate grasping, jumping from paradigm to paradigm, or worse, just trying to find a leader to follow and finding there is none. Then what?
Good luck Hansel.
I appreciate the reply. I wouldn't say I have nothing. I have precious metals and that "trade" makes sense to me (I have physical, no leverage or counterparties). According to Greenspan that makes me a "crazy", and that's fine with me. You could say I'm talking my book, but I only have one opinion - mine.
We have a lot on common. Mostly PM's myself (wouldn't do anything but physical, an ETF kinda misses the point), some cash, and an annuity I can't touch (would if I could) till I'm fired or retired.
I actually think this is the portfolio of a nihilist. We don't trust anything, with the exception of history. No need to over think it when we are long PMs. Just keep collecting on the dips when I have enough cash that I feel safe to do so. Short term, some dollars are a good idea, particularly if the deflation, then inflation thesis pans out. Meanwhile, if my dollars become useless, my physical insurance will kick in, in such a big way, that I will bearly notice that the dollars I have are gone. Not that all of that will be a good thing.
I think having nothing (belief in the system) is having everything. I confess to waxing very philosophical this evening. But not relying on the system is the first step towards self reliance. The muscles are atrophied and sore, but there is something about it that feels really good. Even if they were doing their jobs well, we should have never allowed ourselves to become this reliant on the distribution system, without a plan B.
:) I like the way you think.
A COUPLE OF MY FAVORITE DEAD LEHMAN ALBUMS:
http://williambanzai7.blogspot.com/2010/03/one-of-our-favorite-albums.html
http://williambanzai7.blogspot.com/2010/03/another-banzai7-classic-dead-...
Lyrics available upon request...
PS: Beavis & Butthead LLP stand ready to issue a legal opinion that Dick ("Don't know nuttin") Fuld lacks the "scienter" element necessary to prosecute a 10(b)(5) action.
Why don't we all start a pool or contest to get our hands on the names of those anonymous Lehman banksta's.
"...where there was nature and earth, life and water, I saw a desert landscape that was unending, resembling some sort of crater, so devoid of reason and light and spirit that the mind could not grasp it on any sort of conscious level and if you came close the mind would reel backward, unable to take it in. It was a vision so clear and real and vital to me that in its purity it was almost abstract. This was what I could understand, this was how I lived my life, what I constructed my movement around, how I dealt with the tangible. This was the geography around which my reality revolved: it did not occur to me, ever, that people were good or that a man was capable of change or that the world could be a better place through one's taking pleasure in a feeling or a look or a gesture, of receiving another person's love or kindness. Nothing was affirmative, the term "generosity of spirit" applied to nothing, was a cliché, was some kind of bad joke. Sex is mathematics. Individuality no longer an issue. What does intelligence signify? Define reason. Desire -- meaningless. Intellect is not a cure. Justice is dead. Fear, recrimination, innocence, sympathy, guilt, waste, failure, grief, were things, emotions, that no one really felt anymore. Reflection is useless, the world is senseless. Evil is its only permanence. God is not alive. Love cannot be trusted. Surface, surface, surface was all that anyone found meaning in... this was civilization as I saw it, colossal and jagged..."
-Ellis, from American Psycho
" . . . When you spend what you did on this report, and you go through a firm for a year, and this is all you find? That’s amazing,” the first said.
Actually, what they found were the footsteps of a whole firm of losers not even clever enough to get fraud right, much less legitimate business.
And when you and your buddies at Lehman are so much fucking smarter than everybody else in the world, but all you ended up is out of business and the butt of jokes at Goldman and Morgan Stanley...well, the laugh is on you.
Six years for that bonus stock to vest? Ouch! Man, you were barely working for minimum wage since 2002.
Still good on that mortgage in Greenwich? Kids still at Choate? That wasn't your wife I saw pawning her Harry Winston in Palm Beach was it? And you're driving the Prius instead of the Ferrari because you're just so damn environmentally conscious, right? Need Viagra now? (I mean with your wifey, since the mistress ain't having nothing to do with a friggin nobody.)
Ouch, you bad....mutha...
Goodbye America, it was nice knowing you, for a while at least
MONEY FOR NUTTIN:
http://williambanzai7.blogspot.com/2010/03/money-for-nuttin.html
Wall Street's bankers have passed the clinical psychopathology barrier, and will stop at nothing to destroy the wealth of everyone else not only with impunity, but with a smirk and a smile. Now that's net worth change you can believe in.
Ya, but that's been going on since 1900. The newest twist is that the financial service industry has sucked in the entire baby boom generation into the stock market, who are looking toward retirement....
Given the upside-down demographics, who is going to bid up the baby boomer's stock when they go to sell to fund their retirement? Who is going to pay for their Social Security? Who will pay for their Medicare?
Given the upside-down demographics, with the baby boomers looking to check out of the work force and draw upon their retirement funds and Government Entitlements, and, given that the working population is actually shrinking due to unemployment and underemployment and demographics, is there any mathematical way that we are not Greece or Spain or Japan?
Social Security is, as currently constructed, a Ponzi Scheme. Medicare is unsustainable given the high cost of high tech medicine. And although most people should be able to get most of their money out of the stock market that the put in the past 15 years or so, it's unclear they've actually made much money.
Really without severe structural change, it's money printing for a long time.
My Grandmother told me to never trust the stock market. The rest of the family poo poo'd her, understanding that she went through the depression so she was probably unreasonable impacted.
Turns out Granny knew better than all of us.
Nearly all ancient and/or indigenous cultures revered their elders for the knowledge and wisdom they contributed to the society. In the West, we warehouse them. Why?
To allow our egos to rein supreme. If we were to stop and listen to those who may have greater wisdom implies that we do not have that wisdom. Can't have that. We can describe this runaway egoic response simply.
Self will run riot.
We warehouse our children, too.
Welcome to the big box society, standardization until everyone attains the consistency of Gerber Banana's
Obese sized, just the way we like it.
I was thinking homogenized and pureed with just a couple lumps. Have you seen the news item about the woman who is trying to be the fattest woman in the world?
http://www.postchronicle.com/news/strange/article_212290513.shtml
Ain't it just grand? Literally?
Thanks for that look into the abyss. The image (and concept) has now been burned into my brain.
Suicide by french fry.
"People will do anything, no matter how absurd, in order to avoid facing their own soul." - Carl Jung
Carl helps look into the abyss: Liber Novus
Ouch! Sent mine off again for his warehousing today.
"We warehouse our children, too."
Of course we do. Propaganda and indoctrination are best assimilated when reinforced by peer pressure. BTW, this is precisely the effect the idiot box, aka TV, has upon lone individuals and families. It has the effect of bringing each isolated soul into the collective, telling everyone how they should think, act and be. "This is the collective. If you wish to be someone, you must act like those already in the collective." Group think predictive programming beamed directly into your brain at the point of use. Brilliant.
Oh, the thought just makes me all warm and fuzzy. Yuck, you want to be different?
And look at the places that are designed for assimilation:
Eyesore:
http://www.kunstler.com/eyesore.html
Hey, at least they tried to use color to brighten up the prison.
Brings to mind the image of blind albino children running around the hallways, like rats in the maze.
Gotta love these context-based ad robots. My version of this page is filled with cruise ship blurbs, apparantly triggered by the "drop in the ocean" quote.
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