The Banking and Strategy Initiative

Chillin' out till it needs to be funded

JP Morgan tries to squirm

Too Big to Fail

When this Facebook movie guy wrote this book and I started looking forward to his dealbook blog in the other direction in June 2008, I was just leaving my employment with IBM, sure that there was no doomsday to follow unless everything broke down at once and I never got another job even in home grounds of Bangalore, I had already published the recession and the commentary in my analyst reports on Banking and those by my virtual MI team tracking the O&O industry which I realized I had harbored a little longer than necessary.

However if you read Too big to fail and see Dick Fuld and Jamie Dimon’s actions over that weekend we were all tracking the same and Dimon by action and knowledge had scored his first winning act. In the same breath he had his team and Cazenove draw up new UK HQ plans, which I definitely did not believe would come thru in Sept 2008. It is still unraveling, a deal that had got him City property (Canary Wharf) at a GBP 1000 a sq ft and that is still 2.5 times higher than the new building in Dubai

Jamie Dimon is the right man in the right place and I am ready to pay someone for a chance to take his job and play it 9 to 5. I need a job too. The point being that Jamie Dimon knows that he has won the round that started with Hank Greenberg’s cleansing from AIG, Hank Paulson’s enthroning and the consequent unraveling. The takeaways, we haven’t really moved forward, LTCM will happen again, AIG will ne’er pay up its insurance and new regulation will not be easily absorbed because it is being pushed the wrong end in.

The bankers are enjoying the show, because the regulators have it wrong. And the second wrong however will solve a lot of problems of time on the park bench for a million and more that lost jobs every month in 2008 and 2009. and it will pay the bankrupt governments a few pennies. I love the very thought of a 50% tax on bonuses because it is an enriching and enabling thought. The banks and regulators have to work together and I’m assuming all the carpets the regulators were spreading on backup documents were dusted by the bankers and hence so less of regulatory progress and such extreme thoughts. But in a callous and strange way it solves the problem and shuts up the game. The whole thing has happened so smoothly that unless a few bitter pills are swallowed, carpets will be ripped out every fortnight, every month. No PE funds are going to buy AIG’s distressed blue chip debt let alone Life Insurance and Aircraft leasing engines unless facts are bared afresh.

However, one feels for the poor beings at JP Morgan and Goldman Sachs, after all I would still think I would like to be like one of those winners. They should not mind paying the tax on both sides of the Atlantic and Obama is well of the right mind to do that too!


This entry was posted on January 13, 2010 by in Financial Markets and tagged , , , , .


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