[1] Go Big: Don't just risk your company, risk the entire world of Finance. Modest incompetence is insufficient -- if you merely destroy your own company, you won't get rescued. You have to threaten to bring down the entire global financial system.

[2] If you cant Go Big, Go First: Had Lehman collapsed before Bear, then the same fear and loathing of the impact to the system might have worked to their advantage.

[3] Threaten your counter-parties: Bear Stearns had about 9 trillion in its derivatives book, of which 40% was held by JPMorgan (JPM). Some people have argued that the Bear bailout was actually a preventative rescue of JPMorgan. Its a good strategy if your goal is a bailout -- risk bringing down someone much bigger than yourself.

[4] Risk an important part of the economy: If your book of derivatives is limited to some obscure and irrelevant portion of the economy, you will not get saved. On the other hand, if Mortgages are important, credit cards and auto loans are too. Securitized widget inventory is not.

[5] Balance Sheets Matter: Focus on the media, complain about short sellers, obsess about PR. These are the hallmarks of a failing strategy -- and a grand waste of time. Why? Its called insolvency. ALL THAT MATTERS IS THE FIRMS' BALANCE SHEET.

If you had purchased £1000 of Northern Rock shares one year ago it would now
be worth £4.95

With HBOS, earlier this week your £1000 would have been worth £16.50

£1000 invested in XL Leisure would now be worth less than £5

But, if you bought £1000 worth of Tennents Lager one year ago, drank it all,
then took the empty cans to an aluminium re-cycling plant, you would get
£214.

So based on the above statistics the best current investment advice is
to drink heavily and re-cycle.

Gestalt said...


the good news is the clown who ultimately caused all of this is about to lose his job. bring on a new president.

The financial crisis in the US goes back to the 90s and the era of Bill Clinton. His administration put it to mortgage originators like the Fanny Mae and Freddy Mac (WTF do they get these names?) to loan money to poorer people to get them into the housing market. This was at a time when the Federal government was cutting back on social welfare and public housing spending. The government wanted the finance companies to fill in the slack, and make a profit in the process.

So while I believe Bush the Junior, the shrub, is incompetent, he is not criminal when it comes to this financial crisis.

Newton new the score..

Greedy Gordon Gekko types are running shocked and scared (in the housing market too) because they never want to face facts. Money doesn't grow on trees, what goes up must come down, and when somebody makes money (usually) someone has lost money. Of course it is always the 'other' sap that is going to lose whilst you win big.. right?

That Newton new how to work the market baby, boy did he clean up in the fruit market!

My advice is to get rid of your money by in products that appreciate over time. Windsurfing equipment, audio equipment, plasma TVs. That sort of stuff!