Richie has already done a splendid job on the whole "evil speculators are ruining us" bullsh*t flowing out of Europe with regard to Greece...and Portugal.....and Spain...and Italy....etc... I just want to pile on too!
Umm, no asshats. Speculators haven't ruined you. You have ruined yourselves by running your countries like a decade long frat party and by lying about your finances. Holders (the majority whom are European banks), of your country's debt have done some quick math, keeping in mind that credit ratings from Moody's and S&P are worth bubkis, and have decided, "These guys aren't going to be able to pay us back. Please bid a billion of this garbage!" Wash Rinse Repeat, Wash, Rinse, Repeat..
How ironic it is then that the story of another band of chuckleheads has reared its ugly head today, "Repo 105" In Focus. Ahh, I knew Dick Fuld should have left the country a looooooooooooooong time ago. Erin Callan too. (Another great senior hire by Credit Suisse by the way........hah hah!!!!).
To maintain favourable ratings from the credit ratings agencies, Lehman engaged in what was referred to internally as “Repo 105,” a sort of window-dressing which involved getting $50bn of assets off the firm’s balance sheet at the end of both the first- and second-quarter balance sheets, the report said.
When Lehman first began engaging in such window dressing in approximately 2001, the firm could not get a US law firm to sign off on the transactions, which led Lehman to conduct these repo transactions out of its London unit, with the blessing of a UK law firm, the report said.
A Lehman senior vice president raised questions about the propriety of these transactions as early as May 2008, but the report said that the accountants at Ernst & Young “took no steps to question or challenge the non-disclosure of its use of $50bn of temporary, off balance sheet transactions.
Ahh, remember back in the Spring of 2008 when Dick Fuld stood tall in the pocket and LIED HIS ASS OFF about how solid Lehman was. How he and Callan said the firm was "De-leveraging and De-risking"? Well, anybody who knew anything about the goings on in the structured credit market (also known as The Sausage Factory) said "Bullsh*t!", went to their E-Trade account and short sold the crap out of LEH, as well as FRE and FNM and all the other lying a-holes. In response to this, Fuld ran to mommy, Hank Paulson and his great aunt, Chris Cox and said, "The short sellers are hurting our firm...make them stop!" And so the collective dingbats who ran things back in 2008 obliged DICK and outlawed short sales on 19 financial companies. And most of them failed, or should have failed (hi Goldie!!) anyway! They failed of course because their balance sheets were GARBAGE.
Now, here we are in 2010 and we are getting the same crap about Credit Default Swaps and Greece. Scary isn't it? They (the aggrieved parties) are using words like "contained" again. They are also using the scoundrel's refuge of choice...blame the speculators. These are the same guys who fraudulently cooked their books to issue debt at near risk free rates. Funny how that seems to be forgotten. I guess 3 weeks is a long time.
So now I can't buy protection on Greece or any other country for that matter. Great. Let's see what happens to Europe. You think things are going to calm down and get better? Of course not. Just like the loans and the bonds were bad in 2008, the sovereigns are just as bad. Time isn't going to help anything, especially when Ari and Stavos are willing to lay their lives on the line for their 4 hour work week, their yearly "bonus" and their early retirement and full pension....paid in Euros! Who is going to bail all these clowns out? Let's say Germany and France do it. What's going to happen to their banking systems (which, in case you forgot, are still a mess from 2008) when they take on, or restructure the PIIG's (Portugal, Ireland, Italy, Greece) debts? I'm going to bet that they won't be making a whole lot of loans to the productive members of Europe because they'll be too busy running around trying to enforce unenforceable covenants, negotiating with their governments and the PIIG's governments to take some or all the losses, etc, etc... Between that (and if the governments of Germany and France do the bailout, it's more or less the same thing) and Southern Europe shutting down 3 business days a week for national strikes and protests, what do you think happens to Europe's GDP? I'm going to bet it goes.....down. And if the world's second largest economy goes down, and the rest of the world is already in dicey shape...let's just say it's not a good thing.
It's Miller Time!!!! Have a nice weekend.
Tim Geithner has to go. NY Fed was a regulator here, and Lehman had failed two stress tests. David Einhorn screamed that there was monkey business going on. And Tim Geithner instead of engaged in repos with worthless assets(recall Freedom CLO).
Posted by: Sechel | March 13, 2010 at 02:05 PM
I don't get it. So Goldman *isn't* the bad guy in Greece?
What happens to countries when their banks don't want to lend to them any longer?
Who is higher on the food chain?
Posted by: trader | March 13, 2010 at 10:51 AM