Jim O'Neill's Weekend Just Got Really Bad, As China Prepares To Nullify Local Government Loan GuaranteesSubmitted by Tyler Durden on 03/07/2010 15:31 -0400
The horrible news hits just keep on coming for Goldman's Jim O'Neill. First the BRIC acronym creator (soon to be largely forgotten when confronted with much more awesome comparables as CRAP and STUPID, the latter of which has already been subsumed for general consumption by CNBC) is rumored to be getting the boot from Goldman due to his involvement in the Red Knights group which is seeking to acquire the Red Devils (aka Manchester United), and now China just announced it is about to pull the rug out of the entire lending concept when it announces it is nullifying loan guarantees by all local governments. Just to put this in perspective, the impact of this is akin to what Obama did to Chrysler's secured lenders, multiplied by about one Fed dollop of MBS holdings (i.e., trillion), with debtors not even getting the courtesy Steve Rattner K-Y reacharound. The total potential impact: $3.5 trillion smackers. And some large, recently bailed out bank, has been seen as claiming the CNY is about to get revalued. HA HA HA. Oh, and goodbye BRICs.
- The Wall Street Journal: The country needs a new Fed Chief (WSJ)
- Steve Rattner reminds people he still exists: Bernanke deserves our thanks (WaPo)
- Roubini on lessons from Dubai: Don't assume government backing for state owned businesses (Forbes)
- Must read: Fudging losses is easy when the FDIC does it, too "The surest way for the FDIC to
regain its credibility is by replenishing its fund’s balance
sheet with fresh capital raised from the banking industry, and
by demonstrating that its financial reports can be trusted
again. Until then, its reputation as a captive regulator
incapable of managing its own finances will remain intact." (Bloomberg)
- Goldman takes offense on pay (WSJ)
- Goldman's 2011 forecast would be an absolute disaster for Democrats (Reuters)
- Pensions eliminating stocks add $40 billion to corporate bonds (Bloomberg)
Talk about a brief tenure. Guess today's GM numbers were not all that hot after all. Is Steve Rattner the replacement? Or maybe the President himself can put in some private sector time (oh wait GM is publicly owned now too, nevermind).
Some indicative Chrysler-Fiat car sales in November 2009:
Sebring 3,044 (5%)
300 1,918 (-44%)
PT Cruiser 310 (-91%)
Cherokee 3,085 (-41%)
Viper 43 (-30%)
Durango 29 (-98%)
Just when you thought the US auto industry is doomed, the Mullaly brain trust comes up with this idea of unsurpassed brilliance. Even Steve Rattner can't help but applaud in uncharaceteristic profanity-free silence.
CIT bondholders are starting to disagree on who gets the spoils. This is not very surprising, seeing how they have little (read no) downside to their existing bargaining position. Either way, in today's call hosted by Little Bear Investments, the bondholders are standing firm on their bargaining position.
The FASB's rule mandating quarterly disclosure of Fair Value of toxic loans indicates that most financial firms are still very deep underwater. Case in point: Regions Financial, whose entire Stockholders' Equity would be in the red (and the firm would be in conservatorship at best) at this moment if the firm were to assign fair value to its loan book.
"The Second Circuit explained that the size of the transaction and the residuum of corporate assets are factors that a bankruptcy court must consider, but are “just one consideration . . . along with an open-ended list” of other issues, such as whether the sale was on terms advantageous to the estate and whether a plan of reorganization might be proposed and confirmed in the near future. Moreover, the Chrysler court specifically held that section 363(f) of the Bankruptcy Code allows a debtor to sell assets free and clear of “successor liability” for pre-petition tort claims."
You would think that, having run an investment firm of his own, the likes of Steve Rattner would realize that many hedge funds, particularly trader-centric firms (and which aren't?) record their calls. Apparently, that detail escaped him during the Chrysler bankruptcy fiasco.
CIT Group Inc. says it sees ‘no appreciable likelihood’ of U.S. government support in the near- term. Talks with the government over aid have ceased, the company said in a Business Wire statement.
CDS market investigated by U.S. Justice Department (Bloomberg)
Geithner says global economy faces setbacks (Bloomberg)
German investor confidence falls (Bloomberg)
BlackRock earns at least $71 million for managing taxpayer money (Bloomberg)
Even as Six Flags' OCC (Official Credit Committee) was being formed in Delaware last Friday, with naive participants such as BoNY, HSBC, Esopus Creek Capital, Schottenfeld Associates, John Gorman, Whirley Drink Works and Coca-Cola (the last two must be royally pissed as all their advance profits on $9.95 small cups of soda have just become General Unsecured Claims) all hoping for some meager recoveries, and financial advisors (Broadpoint, Chanin, Moelis, Mesirow, BDO and Peter J Solomon, all of which are now overnight specialists in the amusement park business) trying to bedazzle the committee with their pretty charts and glass beads (and in the case of some, expansive dinners at Tao, where engagement letters were hoped to be signed on the naked backs of blonde, barely legal, Ukranian imports), the ad hocs were preparing for war according to Debtwire.
Our good friends at the CMSA (where alas Chris Hoeffel has recently passed on the baton of preexisting conflict to Patrick Sargent), have issued a lengthy missive in which they implore the administration to make sure it changes the rules so that not only do investors eat 90% of all CRE losses, but if possible to make it so Joe Sixpack actually pays for a little over 100% of the bill. Otherwise, the Commercial Mortgage Securities Association may actually have to mark its book to market and, we all know, that can't happen without a singularity erupting in the immediate subsequent moment.