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Wall Street Has Become Underwrita Non Grata In Europe
First China comes through on its threat of disposing US securities, now Europe is rapidly isolating Wall Street from participating in European sovereign bond offerings. The Guardian reports that "for the first time in five years, no big US investment bank appears among the
top nine sovereign bond bookrunners in Europe, according to Dealogic
data compiled for the Guardian." Curiously, just the one bank which has recently found itself out of favor with domestic investors, Morgan Stanley, has a notable presence in Euro sovereign league tables (at number 10). The biggest loser - the dynamic duo of vampire squid and Fed Jr. "Goldman Sachs doesn't make the table. Goldman made it to number five last year and in 2006, and number eight in 2007, the data shows. JP Morgan was in the top ten last year and in 2007 and 2006 but doesn't appear this year." European leaders are funny - first they use Goldman for everything; now that they have been caught red-handed, they avoid Goldman like the plague.
And while the lost corp fin revenue stream is likely not huge (for now), should domestic issuers follow in Europe's footsteps, it may get a little tricky. We wonder when the Huffington Post will start a "move your money" campaign for capital raisers: urge companies to go to small and boutique banks instead of the bulge bracket behemoths... When dying from a thousand cuts, each little one counts.
As the Guardian puts it:
"Governments do not have the confidence that the excessive risk-taking
culture of the big Wall Street banks has changed and they still cannot
be trusted to put the stability of the financial system before profit;"
said Arlene McCarthy, vice chair of the European parliament's economic
and monetary affairs committee. "It is no surprise therefore that
governments are reluctant to do business with banks that have failed to
learn the lesson of the crisis. The banks need to acknowledge the
mistakes that were made and behave in an ethical way to regain the
trust and confidence of governments... Britain, Spain, Ireland and Belgium have not used Wall Street firms in the largest 10 deals of the year, according to Dealogic."
What about Greece, whose head credit decision-maker is a former Goldmanite? Surely they must have used Goldman in some capacity even after the whole swap-gate:
The National Bank of Greece featured in the top 10 for the first time in at least five years, according to Dealogic. Greece left Goldman and Morgan Stanley out of its most recent bond sale, and also dropped hedge funds from its list. Petros
Christodoulou, the head of Greece's debt management office, told the
Guardian the bond issue had been directed to more "long-term" investors
as they were seeking market stability. Greece has had tense
relationships with Goldman recently after it emerged that the US bank
had helped hide the real level of the country's public debt with
derivatives contracts. The country also denied reports about the bank
selling a stake of its debt to the Chinese government fund.
Hmm guess not. So how is Goldman taking this:
Goldman Sachs said its overall position in the European sovereign bond
market had improved this quarter once US dollar denominated deals were
included. It said its own data showed it ranked fourth in European
sovereign bond sales this year.
But before you shed a tear for Wall Street and the 2% of annual revenues it may lose, read this:
The power accumulated is too large to wane, the author said. "I doubt
this will last," he said. "The US investment banks will be back in
Europe before too long because they are very powerful and they have a
very big footprint in Europe."
When the very people, impacted by the phenomenon that Thomas Jefferson discussed hundreds of years ago would be the end of democracy, could not care less, it is always merely a matter of time before everything is back to normal. We would say the cycle continues, only now, with the assistance of every single central bank in the world, it is no longer a cycle, but a straight line... which goes only straight up.
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Meanwhile the SEC is busy protecting so called "investors" from this guy. One man's battle with the SEC:
http://dailyreckoning.com/why-the-sec-sued-me-and-why-you-should-care/
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More on the SEC
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/2_Harry_...
Is this a violation of World Trade Organization rules barring protectionism in the procurement of government services and contracts?
Whenever Americans want to keep call center and other jobs in the U.S., India objects on the grounds that giving preference to American companies and citizens violates WTO rules regarding government procurement. For example, many states have outsourced jobs processing unemployment and other benefits. As a result, the American workers who once processed unemployment checks are now having to call India to apply (beg?) for unemployment benefits from their replacements.
"Governments do not have the confidence that the excessive risk-taking culture of the big Wall Street banks has changed and they still cannot be trusted to put the stability of the financial system before profit;" said Arlene McCarthy, vice chair of the European parliament's economic and monetary affairs committee. "It is no surprise therefore that governments are reluctant to do business with banks that have failed to learn the lesson of the crisis. The banks need to acknowledge the mistakes that were made and behave in an ethical way to regain the trust and confidence of governments... Britain, Spain, Ireland and Belgium have not used Wall Street firms in the largest 10 deals of the year, according to Dealogic."
What are they talking about? GS is high-fiving it in the board room. God's work has been accomplished here.
The politicians are tacitly acknowledging that they are babes in the wood. Yet they won't listen to experts who say that we should let capitalism have its head, and let companies, states, and countries default.
There has to be a reason. I suspect that it is because of the history surrounding the Great Depression. A few folks established dynasties of enormous wealth in that period. They were those who had cash and could buy up the farms of their bankrupt neighbors. Probably the US gvmt doesn't want China owning half of California, Nevada, Arizona, Illinois, New York, and Florida. So we're buying up the toxic garbage to keep in off of the market and out of the hands of the only player who can plunk cash money on the table---China.
Defaulting does not erase the debt, the actual debt and what the debt stands for.
As to US big structures, they are very well protected by their debts. China(India too) has looked around in order to try to find a good opportunity to buy an institution with a global reach.
Found none as the US institutions are so well protected by their debts. You buy one, you get the debt. Neither China nor India have the resources to cope with a debt of this size. Without telling that if they had acquired one, much of the other US toxic assets would have been funnelled through the newly acquired institutions.
And in what way are non-Wall Street megabanks like RBS, HSBC, Deutsche Bank, CS, UBS etc different from their Wall Street brethren?
Just switching to them is not really solving the problem is it.
Many of the European megabanks are in as bad if not worse shape that those in the US. Look at their exposure to eastern Europe, Dubai, Greece, Spanish real estate, etc.
This is a great opportunity for the European govts to play to pan-European populism, and throw extra money/business/fees the way of the Euro banks without looking completely protectionist.
Regarding the "ethics" jab (merely diversionary I suspect), as I commented elsewhere, you can't have prostitutes without johns.
Shoulda listened to yo momma!
"....the dynamic duo of vampire squid and Fed Jr." wow, funny and terrifying at once!
There's way more to this story than EU governments telling Wall Street banks to take a hike. This smells like EU propaganda designed to make bankrupt governments look like their behaving responsibly.
They came to Wall Street in the first place because they couldn't get the money in their own backyard.
They're on a short leash.
Who cares about your bullshit stories Tyler. The lede of the NYT as we speak features a portly man well into his middle age teaching cross cultural sensitivity to the up an coming corporitites by demonstrating the proper chop stick technique for Japanese dishes. Must have training for even domestically employed corporitites says the NYT. It is beyond fucking amazing that this douchebag can take himself seriously, but when it comes to drawing a paycheck, he is not joking. You can pound that end of American underwriting up your excretory organs, says the NYT.. learn to eat sushi to get ahead.
http://www.nytimes.com/2010/03/09/business/global/09training.html?hp
Why should these companies that robbed the taxpayer, and get help from the FED with lots of paper cash, totally without accountability for the damages they do even be able to stay in the game anymore ?
These wallstreet kids are not more than economic hitman of the regime, so keep playing but keep it inside your regime and keep off our European lawn.
Listen up...
There are ways to ....go in the right direction...
1) Defragment the exchanges
2) Separate the hedge funds from banks and investment banks
3) Enforce the law
4) Make the exchanges RETAIL friendly....and not slanted towards big institutions only....INFORMATION is not level....and frontrunning is rampant....Make THIS basically impossible....via electronic regulations and surveillance....via DEFRAGMENTATION....
5) All information and ratings...all securities ...in wiki fact based timely format....gets rid of the current rating agencies....
6) All transactions have to occur on the exchange regarding all public securities....
7) Change the short sell rules....no locates....just cannot exceed outstanding shares....via electronic tag....
8) Make listings universal in requirements....this should be boilerplate....thus it should not matter if it is a Chinese IB or nay other country that brings companies public....or originates other securities....
9) Make transactions cheaper in terms of the bid/ask spread....and any other costs....Exchanges are now direct access time stamps on name changes...this should cost no more than 20 cents per 100 units....There should be no reason to pay for other peoples buildings , and advertising in particular....THIS IS AN INTERNET WORLD....TODAY....
Not complete...
BUT THE ABOVE WOULD GO A LONG WAY....
Two things as i see it
1) Is Goldman avoiding on purpose? Let the problem develop and then buy the stuff at rock bottom prices!
2) If really true how will Goldman offset the income- by more manipulation of the markets?
You just cant keep a wily crook down for long. Habits do not change- till they are destroyed or put behind bars.
Doing God's work.
Looking across the Atlantic from America it is very easy to give lectures about how capitalism should work and that bankrupt countries should default on their Government debt - yet life is a tad more complicated over here , we have more then just Canada and the problem child of Mexico on our borders - we are surrounded by each other and while I was never a great believer in the European Project , the idea that sovereigns would default on their obligations would make life very complicated over here.
We dont want your stinking paper dollars anymore.
We want GOLD.
Thats what we learned.
Thats what has changed.
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