AllupInyourBiz

Former Governor of MA, and GOP figure in the recent election, submitted an OP Ed piece for the NY Times this week. The article addressed the floundering domestic automotive industry. Romney is a self made independently wealthy individual (Bain Capital) whose father was a Auto industry mogul before becoming a political in Michigan. You would think that these things would qualify Romney to speak on the topic of solving the problems of domestic auto producers. Indeed, Romney is qualified. But Romney’s article “let Detroit go bankrupt” does not delve into any sort of complex strategy based on his expertise as a Private Equity genius. Instead, Romney merely asserts that decisions should be made using common sense. Hmmm, imagine that. Romney astutely points out that “Getting more and more pay for less and less work is a dead-end street.” Romney also suggests that bailing out the floundering auto makers will only prolong the inevitable. I couldn’t agree more.

Move over recession, make room for full blown depression. According to Reuters, the chairman of Mattlin Patterson, an private equity firm, said that he believes financial turbulence may lead to full blown depression. Patterson is quoted as saying “If you don’t accept that there is at least a 20 to 25 percent chance of a financial markets-led depression you’re fooling yourself.” I guess it is time to start buying gold or art, because if there is a depression, that money under the mattress is going to be as worthless as your bond certificates and trade receipts.

As LB’s stock hit an all time low twice this week, Fuld appears to have officially put the firm up for sale.

While the rest of the world’s banks are failing, trying to raise liquidity, trying to keep from failing and freaking out about all of the above, British bank execs say “ho hum, ol’ chap! What credit crunch?” Dealbook today, cited a survey conducted by a consulting firm called the Hay Group. According to the data, over half of the financial firms surveyed, said that the top executives have decided to make no changes in their company’s strategies, to attempt to compensate for the current market slowdown. What’s more, is that only 38% surveyed said that they “see the market woes as a threat.” The financial service sector leader for the Hay Group added his commentary, stating “The sector is sleepwalking into a period of extreme turbulence which is likely to result in some serious damage to those organizations that persist in neglecting proper preparations.”

Lehman Brothers is like a ship bouncing around in rough waters. Last month, it was rumored that the firm was being eyed by Blackstone, HSBC and Barclays, as a possible takeover target. It was recently in negotiations with a South Korean bank to sell half of its holdings. Apparently the deal died before the terms could be finalized. According to Dealbook, takeover rumors are flying again today. Dealbook has learned that “Theodore Janulis, the global head of Lehman’s mortgage capital division, and Richard McKinney, its head of American securitized products, will be leaving the firm.” The meat of the article, however, is the alleged reason for the upgrade in stock rating today. Dealbook reports that Richard X. Bove of Ladenburg Thalman sent a note to his clients, listing the reason for upgrade “Hostile takeover now a possibility.” The reasoning behind this prediction is unclear, but Dealbookspeculates that it could be based on the failed negotiations with the South Korean buyer. More rumormongering? I guess we will see.

As the debate on the best way to fix Fannie Mae and Freddie Mac, continues, one thing is for sure… They are both going to change, big time. Ideas for two quasi-governmental entities include: Reverting to complete governmental control; Breaking them into smaller entities; Phasing them out completely; Limiting their functions and; Limiting their borrowing ability. Why not all of the above?

Finally, some good news from Wall Street. JPMorgan Chase raised 1.6 Billion in hybrid securities yesterday. The offering, pays out at 8.625% and contains a mixture of equities and bonds. Hold your breath and cross your fingers that they perform well, and that there is more to come.

Today, Merrill Lynch announced a hiring freeze that will be in place until the end of the year. The news came written in a formal memorandum from the ML’s President, Gregory J. Fleming. The reason for the freeze, if it is not already obvious, is stated to be a mitigation tactic for the billions in writedowns that the firm has recently suffered. Not to worry, says DealBook, the majority of ML’s hiring generally takes place during first and second quarters. Any bets on who will be next, with the formal hiring freeze?

 Today a 172-page report was released by various chief risk officers, as well as other senior level executives from large Wall Street banks, outlining exactly what went wrong with the economy. The authors not only speculate as to the cause of the current situation, but also offer tips for avoiding a recurrence. Hmmmm, so you know what happened, you know how to avoid it….. you just wanted to test out your theories, or something?

Indymac, the step cousin to Countrywide, when it comes to writing crappy residential mortgage backed paper, announced that it plans to file for Chapter 7 relief. The bank was seized by federal regulators three weeks ago, and now plans to liquidate its remaining assets under a Chapter 7 plan. After the Indymac announcement, all of the 2 bit, mom’s-basement-type mortgage brokers around the country could be heard sobbing into their pillows.