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    « Stickman@Columbia Business School: a Homecoming April 2,2009 | Main | WTF? »
    Thursday
    Mar262009

    Stickman Homecoming: April 2, 2009

     

     

    I helped caused this mess-- I intend to help clean it up.

     

    Tiptoe thru the tulips-- history of bubbles

         "Extraordinary Popular Delusions and the Madness of Crowds" by Charles MacKay (1841)

         "Manias, Panics and Crashes" by Charles Kindleberger

              -Minsky Model

              -Lender of Last Resort

              -Controlled Ambiguity

              -Too Big to Fail

    "We're gonna need a bigger boat!"

           -Chimerica

     

    Wow-- nothing really new but this one is really different!

         1979 Inflation rears its ugly head, prime rate breaks into the teens, tops out at 21.5%

         1982 Henry Kaufman and the bull market for bonds

         1987 October 19th

         1991-1995 Real Estate Crisis/S & L Debacle/ Junk Bonds/ Golden Age of Drexel -- RTC

         Commercial Real Estate Actul  Loan Losses $50 billion

         1998 Long Term Capital Management/ Asian Flu/ Russian Currency Crisis/ Oscar Meyer Weiner Realty         Roast

         2001 Dot Com Bubble Bursts; Age of Greenspan; Never Short the Fed

         2004-2007 Every Credit has some level of  AAA

         2008 Subprime starts a nuclear reaction-- How a $500 billion problem  (okay call it a trillion) turned into a $100 trillion meltdown

         Fannie and Freddie

          The Madoff Ponzi Scheme

          Evisceration of Trust

          The problem the rating agencies

         2009 Commercial Real Estate

                Shut down of Securitization market

                Financial Crisis becomes economic crisis

               Credit Losses versus liquidity losses

              Diminishing cash flow versus roll-over risk

               Deleveraging- Car going 80 mph gets thrown into reverse the laws of physics take over

              Need for Speed Bumps

     

     

     

     

     

         Too Big to Fail or Too Big to Succeed?  A Doctrinal Re-assessment

         Controlled Ambiguity

         The Art of Toast Making

    Mark-to-market accounting/FAS 157

    SIVs and off-balance sheet exposure

    Margin Calls

    Sub-prime

    CDO/CDO Squared/Synthetic CDOs and other Financial Exotica

    Credit Default Swaps $62 Trillion Omelette

    Bear Stearns Yes-- Lehman No-- AIG Yes

    TARP Pee-Pips and other financial follies?

     

     

    Asset Liability Mismatch

     

    Rules of Engagement

         Share the pain equitably and fairly

         Single election remedy problem: LIAR Loans and NINJA Loans

         Consensual restructuring/ Chapter 7/ Chapter 11/ The keys are in the mail/ Government Intervention

         When things get ugly

                AIG Bonus Problem

                 Tyrrany of the Majority

     

    Solutions:  Anybody got any good ideas?

        Innovation and Entrepreneurship

       Shakespeare:  First thing we do is kill all the Lawyers

       Other tools: fraudulent conveyance/ unjust enrichment/impossibility of performance/ ultra vires

       Change mark to market/ fas 157

        Prohibit/disaffirm all non-correlative hedging credit and speculative derivatives

        Eliminate the Information Discount

       Will Geitner make it?

       Whose in Charge

       Rebuilding Trust

        Rebuild confidence

       Never let a good crisis go to waste

       The $17 trillion question

       Premier Wen: You gonna pay me back Obama?

        We're gonna need a bigger boat!

        Turning an Ocean Liner in the harbor -- David Gergen

         Moment of great fortunes; change in sensibilities

         Financial values versus ethical values

         Capitalism at a crossroad

         The bottom billion

     

     

     

     

     

     

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