“Everyone is walking around like they have just been Tasered”

that is why I dont go to new dev conferences. Very biased and to me, simply a sales pitch to unsuspecting brokers who don't quite GET IT.

Toes got her share for that article, and there were many things I disagreed with, posted in comments section. Its not her fault, she was writing on what she took from the conference and what shee sees in her little world of real estate. I know she has tons of buy side demand, and continues to get more calls, so its hard for her to agree with some of the macro forces I discuss constantly.

Some of the comments from speakers at the conf were outright ridicoulous, but can we expect anything less? No. Foreigners already bought, confidence trumps the currency trade, and the recession is now global. Done & done.

Of course there's demand - at what price? I'll buy (someday) when it's as cheap as it is to rent, but we're a long way from there.

As I mentioned, a friend's father is a commercial real-estate broker, we were driving back from Philly Wednesday and he was pointing out all the high-rise floor plans being reconfigured from luxury condos to rentals.

LEH is dead - half their staff will be gone, as happened with BSC. We have yet to see the ultimate fate of Merrill and Citi; I expect more carnage there. And AIG. And WaMu, which cannot survive this and is likely to become part of Chase - soon. Wachovia may survive, but is likely to become part of Wells Fargo.

Remember, too, that when commercial banks take over investment banks, bonuses are severely limited: commercial banks know that they get their money from deposits, which are guaranteed by the government, not from short-term loans, which are not. They are very conservative, by nature and need.

Im with you Steve. Already wrote about it on UD about 30 min ago. Yes, 50% of the work force will be gone, bonus stock options are pretty much worthless. I think next three are WaMu, Merrill & Wachovia in mid 2009. I doubt Citi will be allowed to fail, although their books are a complete mess, prob the worst of the bunch. They are just so damn big. Ben will bail everyone out. I discussed the bonus problem for 2009 9 months ago, when everyone was fighting me about the severity of the crisis and that Im on crack.

Look now. Im on record for bonuses being down 50% in 2009 from 2008 levels.

Merrill is the crown jewel of that bunch, but only because of its sales force and distribution network. If it sells its Blackrock for a decent price, they may be able to squeak by. They also own a small bank that has a deposit base that they could get rid of, though it is highly integrated into their business model.

I said in March (and earlier) that LEH would likely fail. The deal I see is private equity taking over the loan portfolios because they can hold them to maturity without having to mark them to market, Barclays taking over Neuberger, and BofA taking over the investment bank / client business, integrating them into Banc of America Securities and US Trust. BofA would prefer Merrill, I think, but with the government at their backs, something like that would make sense.

Merrill is better off then you think and will survive. AIG will be able to handle the downturn as well. Wamu is in a more precarious position, but I also think they will stabilize.

Wachovia will have to make some big decisions due to their exposure. Citi has had problems for several years. They are too big. Even in good markets, one division is always bringing the numbers down from other divisions. They would likely have decided to sell off a piece or two even if the market was stabilized. My guess is that this will happen in '09.

This is not to suggest that there won't be more pain, because there will be. But the banks are not just going to buckle like a house of cards. They are more prepared for the cycle we are going through today than they were 12 months ago. It won't be pretty, but they will straighten out.

waverly, for the most part I agree. Merrill may well survive - they do have an amazing asset to divest if needed, and I think they have the backing of Singapore. Citi will just be split up, or divest the myriad assets they have all over the world. It's not its size so much (JPM with BSC and WaMu and BAC with LEH and Countrywide will be just as big or bigger) as it is its complexity. JPM and BAC know that they're US banks - what is Citi?

We are truly hitting bottom here. Watch WaMu. I bet they're on the phone with Jamie right now.

"The whole idea was, 'Let's be so unbelievably diversified that we won't be affected,' but when the credit markets seize up, no matter what kind of financial company you are, everything seizes up," said William Smith, president of New York-based Smith Asset Management. "The UBS statement basically shows the model is a failure."

http://www.dispatch.com/live/content/business/stories/2008/08/17/wall___main_0817.ART_ART_08-17-08_D1_9CB1DT7.html?sid=101

Agreed on Citi steve. Hedge funds have been clamoring for these banks to be split for years. They may finally get their wish.

That was the idea on mortgage-backed securities and CDO's, as well: diversify the risk. They try to use the reinsurance model, but reinsurance can be quantified pretty well by actuaries. An earthquake in Guatemala doesn't affect a fire in London (unless your a super-adherent of chaos theory). But default by a major financial player, or rating AAA securities backed by mortgages given to people with no verified income, don't work like that.

Part of Citi's problem is that the left hand doesn't know what the right hand is doing. They have so much "fat" in middle-management....people who do nothing but supervise other people who actually do the work. That is not how any other top-tier FS firm is run.

What would you say ya do here?
Well look, I already told you! I deal with the goddamn customers so the engineers don't have to! I have people skills! I am good at dealing with people! Can't you understand that? What the hell is wrong with you people?

And here's another thing, I have eight different bosses right now.
Eight?
Eight, Bob. So that means when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled, that, and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired.

These could easily have been uttered any day of the week by any Citi employee.

good reference.

Go Ted C. McGinley!

I've been hearing stories of late about people who have borrowed against their LEH, AIG, MER stock etc. First come the margin calls, then the asset liquiditions. I'm also guessing we'll see a wave of retirements and relocations to cheaper areas once the crisis passes and senior executives are able to move on. The wave of semi-forced selling has the potential to be immense. Markets hate nothing more than forced selling (just ask the banks).

If BAC takes over LEH you might actually see more iBankers move up from Charlotte. Won't offset the firings, but maybe mitigate them.

Trading desks can be anywhere in the world. Just, the trader psychology seems to like working in Manhattan.

More outsourcing of research to India...?

thing is, I don't think BAC has anywhere near the number of bankers than what they'd be laying off from Lehman.

Also, remember, BAC bankers are partially Robertson Stephens, which was also West Coast. Overall, I think they're pretty spread out. I only know one BAC big money guy in NYC, and he's on a desk...

“Everyone is walking around like they have just been Tasered”

"What did I do?! I didn't do anything. Don't tase me, bro! Don't tase me! OW! OW! OWW!!!!!!"

"are partially Robertson Stephens"

They got rid of Robertson Stephens years ago, if I'm not mistaken.

You are correct, I am thinking about Montgomery. Thought I do believe they took on some RS guys at FleetBoston, which went into BoA.

Yes, but Montgomery was actually a spin-off of the old BofA in San Francisco. That was years ago - they're probably mostly retired.

Montgomery was a spin-off of the old BofA in San Francisco?

Montgomery was bought by BofA around 1999. This BofA merged with NationsBank of Charlotte and took the Bank of America name.

Montgomery was absorbed and the name did not survive.

Robertson Stevens was a Montgomery rival, bought by FleetBoston around the same time.

FleetBoston was bought by Bank of America around 2004.

There really aren't Robertson Stevens or Montgomery people around anymore at BofA, with very limited exception, and certainly you wouldn't expect after this many years and cycles in Wall Street and cycles at BofA in particular.

lintinin - for somebody who's a recent poster, you seem to have all the answers.

Wow! Je suis impressé!

What does the recency of me posting on this have anything to do with the accuracy of my information?

And why if I have accurate information do you act in a mocking (anything written in French is mocking) fashion, when in fact my accurate information was to correct your inaccurate information?