The Candy Man Can...For 50% Off

Earlier today, I strolled into a Duane Reade store. For those of you who aren't familiar with Duane Reade, the best way to describe it is as a smaller version of CVS or Walgreens. There are about three million of them in Manhattan. You can't have a construction crane collapse in this city without hitting one. That's not just a saying; it's based on actual occurrences.

Entering the store, I was immediately reminded that Halloween is little more than a month away. The store had display cases and shelves filled with more candy and chocolate than I've ever seen in one place at one time. They had absolutely anything and everything you could imagine.

Now, in the spirit of full disclosure, let me state that I do not celebrate Halloween. Never have. Never will. However, Halloween still means something to me:

Cheap Candy.

Ah, yes. Cheap candy. Cheap, some-idiot-in-the-purchasing-department-at-headquarters-thought-it-would-be-a-good-idea-to-build-up-enough-candy-inventory-to-supply-every-man-woman-and-child-in-the-galaxy-with-all-the-candy-they-could-eat-for-the-next-ten-years-and-now-we-desperately-need-to-get-rid-of-it-to-make-room-for-the-Xmas-decorations candy. Nothing like it.

Within a week after Halloween, this stuff will be selling at half price. By Thanksgiving, it might be marked down by as much as 60%-75%. Come New Year's, and they'll just be tossing it at homeless people. I believe this is why so many of our unfortunate, homeless people also have no teeth.

Interestingly, when I was younger, I didn't have much of a sweet tooth. Nowadays, though, I find that I really like candy. I believe that there is a medical term for this: Late Onset Candy Dependency (LOCD). I like my corn candied and my beans jellied. Yep, I'm probably one of the millions of Americans with LOCD.

So there I was, at Duane Reade, eyeing all the candy and chocolate. I felt like a medieval prince of sorts, surveying his father's kingdom, then saying, to no one in particular, in a really overdramatic tone of voice, "Some day, all of this will be mine." At less than half price.

I walked up and down the aisle, making a mental note of the current, pre-Halloween prices of the candy. This way, when I do come back in about 5 weeks, I'll know just how much I'm saving.

Apparently, it must have looked a bit weird, picking up bags and boxes of candy or chocolate, looking at them and the price label on the shelf, then putting them down again, seemingly without any intent of actually buying anything. The security guard started eyeing me suspiciously, so I moved over to the next aisle, and pretended to browse the liquid soap selection. (That stuff never goes on sale).

Come to think of it, I'm not sure why I allowed myself to be intimidated by this rent-a-cop. He didn't have a weapon of any sort, appeared to be about 70 years of age, wore thick glasses, and walked (perhaps "shuffled" would be a more appropriate term) with a pronounced limp. If push came to shove, I'm pretty sure I could've taken him. Not that push would've come to shove. If he had gotten any closer to me, I'd have said, "Look here, Earl. I don't want no trouble, you dig? Let's keep it nice and simple today. I'm cool. You're cool. All of us here are just hanging out at the Cool Convention." And that would've been that.

When I do come back, after Halloween, I'll definitely be looking for some of my favorite confections. However, when the prices are that good, you just end up buying candy and chocolate you'd never have bought otherwise. (Just ask FBB. It happened to her last year. And the year before that.) Then again, that's not a problem. It's candy; you really can't go wrong.

Well, maybe you can.
There is one item that I know I will not buy, no matter how low its price goes.
It's been blacklisted.

Reese's peanut butter cups.

There are a couple of reasons for this. First of all, I just don't like them. Then again, there are plenty of things I don't personally enjoy, but I'd buy them anyway, in case someone in my family likes them.

Not Reese's peanut butter cups.

It's all because of that darned commercial.

About 25 years ago, I think, there was a Reese's peanut butter cup commercial which aimed to demonstrate that chocolate and peanut butter could form a sensible snacking combination. To illustrate this point, the commerical featured two guys walking down the street, in opposite directions, walking towards each other. One guy was munching on a chocolate bar. The other guy was eating peanut butter out of a jar with a spoon. Neither one was watching where he was going, so inevitably, they bumped into each other, causing the chocolate bar to fall into the jar of peanut butter.

The following conversation ensued:

Peanut butter boy: "Hey, you got your chocolate in my peanut butter."
Chocolate bar chap: "Well, you got peanut butter on my chocolate."

After this incredibly witty exchange, chocolate bar dude eats his peanut butter-covered chocolate bar, while peanut butter lad tastes his chocolate-tainted peanut butter. They agree! It's good!

The commercial ends shortly thereafter with a reminder that chocolate and peanut butter, are, in fact, worthy snack collaborators, and that if you didn't immediately buy Reese's peanut butter cups, you were a worthless toad (I probably made that last part up. Or, maybe they said it, subliminally).

Clever commercial, isn't it?

Not in my opinion. In fact, it's ridiculous, hence a blacklisting that has lasted lo these many years.

Here's the problem.

Walking down the street eating a chocolate bar is perfectly acceptable behavior. For all I know, I've probably done it myself once or twice. I honestly can't remember right now.

The thing that's been bothering me for all these years is...

WHO IN HIS OR HER RIGHT MIND WALKS DOWN THE STREET EATING PEANUT BUTTER OUT OF A JAR WITH A SPOON?!?!

Now, I like to consider myself a reasonably worldly, open-minded guy. And I've seen some wacky things in my time. But I've never, EVER seen someone walking down the street eating out of a jar of peanut butter. EVER. Not even in California.

If I ever did see a guy walking down the street eating peanut butter, I'd probably cross the street to avoid him. Or, I'd do this:

I'd wait until he put a spoonful of peanut butter in his mouth, then I'd initiate the following conversation:

Me: "Loser says 'Mwwlmmwlumm.'
Guy with a mouth full of peanut butter: "Mwwlmmwlumm?"

At this point, I'd simply cackle and walk away.

To be clear, I don't think there's anything wrong with eating peanut butter out of the jar with a spoon. I don't do it, because I happen not to like peanut butter. I've eaten Marshmallow Fluff out of the jar with a spoon. Heck, I've even eaten some jelly out of the jar with a spoon. But, here's the catch. I did it in my kitchen. I've never done it while walking down the street!

If life were to one day imitate art, and I was walking down the street eating a chocolate bar, and I bumped into a guy eating peanut butter out of the jar, causing my chocolate to fall into his peanut butter, and he had the audacity to say "Hey, you got your chocolate in my peanut butter," I'd reply "What kind of idiot walks down the street eating peanut butter?" Then, I'd probably slug him. Unfortunately, if there were cops in the vicinity at the time, I'd probably get arrested for assault and sent to jail. I'd then make the one phone call to which I was entitled, to FBB: "Hey, you're not going to believe this, but some jerk was walking down the street eating peanut butter out of a jar. Anyway, long story short, I need you to bail me out."

Quite possibly, FBB would take her sweet old time getting down to the station, for three reasons:

(1) To give me some time to think about the consequences of what I'd done, and to teach me a lesson.
(2) Because she wouldn't believe that a guy would eat peanut butter while walking down the street, and would just assume that I was pulling some sort of sophomoric prank.
(3) Because we need that bail money for post-Halloween candy.

Let's just say I really hope this never happens.

Anyway, there's tons of other candy and chocolate to buy at Duane Reade after Halloween, so crossing one item off the list won't derail my plans at all.

So have a good day, Earl. Good luck maintaining law and order. You'll be seeing me again soon. When you do, could you please point me in the direction of the store's loading dock or service entrance? My wheelbarrow probably won't fit through the front door.

Now I Understand Kruschev

I've been really busy this week. Being busy is great, it focuses the day, makes you feel accomplished, and just gives you that AHHHH, breathe in the air, wonderful sense of being alive. Those of you who are gainfully employed probably don't fully understand what I'm talking about, so I'll break it down for you.

There are two types of weekends. There's sit around the house, do nothing much besides read the paper, watch football, nap and eat, weekends. Then there are clean the gutters, change the bulbs, cook, clean up the lawn, go to HomeDepot, do errand type of weekends.

Now, think about which weekend makes you feel better. That's how I felt this week.
Until I lost the shoe. When things disappear, seemingly for no reason, it is absolutely maddening. When there's absolutely no explaination and absolutely no trace of the item, you could go mad. But, if you've ever been walking or driving and seen a shoe at the side of the road and wondered "how does someone lose a shoe?" You can be pretty sure that person is wondering the same thing.

Lest you think that I am carelessly shedding my footwear, rest assured the shoe is not mine. No, 'tis the shoe of my 18 month old. And it's gone. I've looked everywhere, retraced my steps from the last place I remember her having it (obviously that would be her foot, I mean the place where her foot was the last time I saw it on her), and nothing. Poof, gone. Just on the off chance that it was actually missing longer than I thought, I asked in the local grocery store if anyone had turned in a shoe. The guy in the office said no, but he seemed none to surprised. As I walked away from the window I saw why. There on the chalkboard outside the office, hanging among all the lost keys, gloves and sunglasses was a pair of toddler shoes.

OK, so one shoe I now understand, but BOTH?!?!? Man, I don't want to ever understand how that can happen!

Basically I have to buy a new pair of shoes for my toddling toddler (who is so cute, BTW, shoeless and all). Not that she deseperately needs shoes, but it certainly makes my life easier when I can put her down outside. Plus, it gets tiring constantly pulling out splinters....I'm kidding.

So if anyone is around IcebergCarwash, and happens to see a very cute Stride Rite brown shoe with pink flowers you can let us know. Unless you hear of a shoe store selling single shoes. Now that would be great!

Obama wears Purple Lipstick

Earlier in this space we extolled the virtues of changes. Those were specifically changes that one can make on a personal level.

On a more municipal, global level, change is not always positive. Though the argument, usually said with a "get over it" attitude, "Things Change" is not that easy to refute, that doesn't make it a solid or valid point of debate. It's almost like "Because."

Just because something is a "change" that doesn't automatically mean that it's better, but the argument is always that people fear change and like the status quo, and the status quo that we know was once a change for other people. This may be so, but it doesn't mean the change is going to be an improvement, but you can be sure it will be rammed down your throat. And then once it is, there is nothing to do but accept it, or live angry the rest of your life.


So at this point you're thinking, huh? Where's a confusing financial post when you need one!?!?

On a local level CHANGE can relate to development and over development, new laws and taxes, and various programs initiated and stopped. So I'll use an example bandied about quite a bit in these parts. In 1933 the German government changed. We all know how well THAT turned out.

Nationally change is a big issue right now. This country needs a change. IT needs to get away from 8 years of cowboy antics, cronyism, big shows claiming success, and strict adherence to policies that aren't working.

Obama doesn't fit that bill. He may not unfurl a banner proclaiming "Mission Accomplished," but his eloquence, charisma and rhetoric achieve the same photo op and sound bite effect. Cronyism...the man is from Chicago politics...enough said. And Adherence to policies that aren't working? Obama has admitted that the surge (of which Mcain was a major proponent)was successful from a military viewpoint, but because not all the political benchmarks have been met it's time to get out.

Now, I'm not advocating staying in Iraq at full power for a long, long time, but we need to base that decision on the facts on the ground, and not as a way to pacify the electorate and get votes. Plus, I think the military needs to pare down in Iraq so that it can deal with the threats in Afghanistan, Pakistan, and potentially Iran.

I think the war, though it has benefited Americans in that the terrorists all set up camp over there and blew our soldiers to smithereens (or hacked their heads off), was started under false pretenses, and the course was stayed a little too long (perhaps a problem in the Bush family), until finally some progress was made. But so were many mistakes. So I'm not saying those who were/are against the war are totally wrong...maybe just Obama. Seriously, I'm afraid that the economy will put him over the edge, though his policies are wrong for this type of economic downturn (how's that for Euphemism!). Though mostly I will leave that to MBB as finance appears to be his bailiwick.

It's funny to me how they keep characterizing Sarah Palin as a Hockey Mom. It's so derogatory, I've heard a number of reports were she is referred to as a Hockey Mom as opposed to, say, y'know, THE GOVERNOR OF ALASKA!

Plus, they're talking about her inexperience, and how she's getting a crash course on foriegn policy by going to the UN to meet with world leaders. I'd like someone to tell me when and how Obama got HIS crash course. Was it in two years in the US senate, or maybe it was his trip to Europe where he spoke to a screaming throng of 200,000 Germans. Hmmm, if that doesn't make you shiver, I don't know what would.

There's six weeks til the election. Don't worry there's more coming.

An Elegant Solution to The CPP Crisis

First, an update on IcebergCarwash's CPP:
As of a little while ago, our CPP had increased to 1.42.
While that's better than a couple of days ago, it falls far short of the goal.

I noticed that a couple of you had posted comments with recommendations for raising our CPP. Those are good ideas, and we might even implement them. However, we had something bigger and brassier in mind. Something cutting-edge, perhaps, that would really "move the needle."


Ladies and gentlemen, I think we just might have found something.


In analyzing the components of our comments-per-post calculation, it became apparent that the posts that had received no comments at all were dragging us down. If we could only do something about those posts, everything else would fall into place.

To illustrate, if we were to remove the zero-comment posts from the calculation, our CPP would go from 1.42 to 2.31. If we also removed the posts with only one comment, our CPP would increase to about 3.10, above the required threshold mentioned in the previous post.

But how could we accomplish this? Short of deleting previously-published posts, which was expressly forbidden in the terms of our $10 billion loan, how can we make posts simply disappear?

With some fancy financial engineering, that's how.

(Please refer to the three slides located on the right-hand side of the page, directly below the poll. If you're having trouble reading them, and would like a Power Point presentation containing these slides, e-mail us at icebergcarwash@gmail.com).

(1) We will create a special-purpose-vehicle (SPV) (as shown in the first slide). This entity will not be owned by IcebergCarwash, but will be owned instead by a mostly-unrelated 3rd party. Of course, the assets and liabilities of the SPV will not appear on IcebergCarwash's balance sheet. After all, we don't own it.

(2) Not wanting to burden the 3rd party with the need to come up with the funds necessary to establish the SPV, IcebergCarwash will lend the necessary funds to the 3rd party.

(3) The SPV will be known as "IcebergCarwash Acquisition Corp."

(4) As "IcebergCarwash Acquisition Corp." sounds a bit suspicious, and might raise some red flags, we will give the SPV an exotic name. In a purely original move, we will name it after a character from the Star Wars movies. Specifically, I recommend that we name it "Lando Calrissian," who was played in the movies by Billy Dee Williams. Who is very smooth. Like velvet.

(5) Given the difficulties involved in accurately spelling the name "Calrissian," we will shorten the name of the SPV to "Lando C.".

(6) Lando C. will acquire all of the low comment-volume posts (LCVPs) from IcebergCarwash, in a "negotiated, arms-length transaction," for approximately $30 million.

(7) Rather than pay the $30 million to IcebergCarwash at the time of the purchase of the posts, Lando C. will borrow the money from IcebergCarwash, to be repaid at some unspecified point in the future.

(8) By removing the low comment-volume posts from its balance sheet, IcebergCarwash will have significantly increased its CPP. We would probably just sell the zero-comment posts at first, then follow that up, as needed, with a sale of the other LCVPs. If our CPP were to go from 1.42 to over 3.00 virtually overnight, it would probably attract too much attention. We need to go for a gradual increase, making sure to manage Wall Street's expectations along the way.

(9) Eventually, once our "core" CPP is high enough that we can afford to take the LCVPs back onto our balance sheet, we will simply unwind the SPV structure (as shown in the second slide).

(10) In unwinding the structure, we are guaranteeing a profit for Lando C.

(11) Lando C. will return the posts to IcebergCarwash.

(12) IcebergCarwash will pay Lando C. $32 million for the posts.

(13) Lando C. will repay its $30 million loan to IcebergCarwash.

(14) The remaining $2 million will go to the owners of Lando C., who at their discretion, could choose to pay a management fee to the originators of this structure. The originators of the structure, may or may not be affiliated with IcebergCarwash. We're not telling.

In reviewing this proposed SPV structure with some tax attorneys, we were told that there might be some issues with a direct transfer of the posts from IcebergCarwash to Lando C.

(Specifically, they said that there could be some "jurisdictional issues." That's a fancy way of saying, "Sure, you can do it, if you don't mind living in Eritrea for the rest of your life." I don't think they were being literal. They were probably referring to any country that doesn't have an extradition treaty with the United States.)

Therefore, we have also come up with a slightly more complex structure (see the third slide).

In this scenario, we would reorganize IcebergCarwash as a holding company. We would create two wholly-owned subsidiaries, IC USA and IC Cayman Islands. All high comment-volume posts (HCVPs) would be transfered to IC USA. All of the LCVPs would be transfered to IC Cayman Islands (where "arm's length" doesn't mean much. They've got really, really short arms in the Caymans). Then, we would go through all of the steps outlined above, with IC Cayman Islands taking the place of IcebergCarwash in the structure.

FBB and I are really excited about this idea.
We think it will work, and it seems quite original.

On that last point, someone I know mentioned that this SPV thing really isn't all that original. In fact, a few years back, some slick guys in Texas supposedly used a structure like this to great effect.

Yeah, right. Texas.
Wait, don't tell me, these guys were close to the President too, right?

C'mon, who are you trying to kid?
We didn't build IcebergCarwash into the 7th largest blog in the U.S. by being gullible, did we?

Whew, That Was Close!

These have been busy days for us here at IcebergCarwash, as the blog struggles to remain a viable entity.
I don't wish to cause any undue alarm, but we have some problems.
In Washington-speak, "issues have arisen."

Allow me to explain.
The trouble actually started before the blog went live.
Not content with creating a plain old blog, we realized that we needed to get very big, very quickly.
Toward that end, aided by some eager banker friends, we quickly raised the capital we needed to fund all of our aggressive expansion plans for IcebergCarwash. In all, we borrowed about $10 billion (give or take a couple of hundred million).

Granted, that probably seems like quite a bit of money. It is. Especially in 2007 dollars. However, FBB and I did some financial engineering to reduce our risk. If nothing else, IcebergCarwash is about managing risk. The debt we raised was to be paid back according to a schedule that was based on a complex formula. In a nutshell, the key statistic is Comments-per-post (CPP). As its name implies, this statistic is calculated by dividing all of the comments the blog has received by the aggregate number of posts, yielding an average number of comments per blog.

As long as our CPP remained above 3.0, we would not be obligated to pay any principal or interest on the loan, nor to provide any collateral. However, if our CPP dipped below 3.0, and remained there for a period of 7 days, the entire loan would be repayable, in full, immediately. We'd also be responsible to pay about $500 million in retroactive fees, or 12 million times the 30 day moving average of the volatility index (VIX), whichever is larger. Like I said, this thing is complex.

The CPP target number (3.0) wasn't simply picked at random. We formed a team, comprised of a nice mix of professional investors, academics and bookmakers. Two-thirds of the team members are PhDs. The team performed some analysis, based upon a relatively small, yet statistically representative slice of the Blogosphere, about 12 million sites. We calculated the average CPP for each blog, then plotted the results on a graph. Not surprisingly, the graphical results resembled rather closely the classic bell-shaped curve, denoting a normal distribution. Then, by calculating the mean, and standard deviation, we determined the odds that IcebergCarwash's CPP would fall below 3.0. We then smoothed out the calculation for the "lifecycle effect," taking into account the fact that a blog's CPP is lower in the first few weeks of its existence (introductory phase), rapidly building up to its peak, about 11.5 months in (the ramp-up phase), and flattening out for a period of 9 months (maturity phase), before very slowly declining (mind-numbing boredom phase). We also threw in some qualitative factors, for good measure.

The answer? There was a 0.003167% chance of us falling short of our CPP goal, thereby running into a credit problem. That's what the PhDs told us. In banker's parlance, this was what you'd call "a lay-up."

Needless to say, things haven't gone as planned on the CPP front. As of this morning, the blog contains 25 posts, with a total of 32 comments, or a CPP of 1.28. That's not too good. To put that number in perspective, Qwerishi Astjinogsbitae, a young Kenyan boy who lives in a makeshift tent with his donkey, Chaz, writes a blog entitled "Qwerishi Astjinogsbitae," named for his cousin, with whom he shares a name.

His CPP is 2.33.

I've always been in favor of that whole developing world thing (we need to find more people to purchase our government's bonds; the Asians are pretty well saturated by this point), but this is humiliating. Not to make it personal, but this kid has never so much as seen a toilet in his life, and his CPP is 82% higher than mine.

What I'm saying is, there's no way we could've seen this coming.

At this stage, we could not afford the luxury of wondering what went wrong. Clearly, there were once-in-a-lifetime events, well beyond our - or anyone else's - control, having heretofore unpredictable effects on the global blog markets.

We needed to move on, and figure out how best to deal with our $10,500,000,000 problem. It was time to get busy.

In fact, FBB alluded to this very situation in her previous post ("It's the Destination, Not the Journey..."). As I'm sure all of our readers have figured out by now, that was a brilliant, allegorical post. "Cleaning out the garage" and "sorting out the clothes" are simply metaphors for "fixing up the balance sheet" and "dialing for dollars." Wait a second, those last two are also metaphors, for "putting our house in order" and "keeping our powder dry" and...never mind. You get the point.

We first attempted to sell ourselves to a larger blog. Unfortunately, we didn't receive any worthwhile offers. We might seem desperate, but certain multiples are just flat-out insulting. This is not a fire sale.

We then approached the government, seeking some short-to-intermediate-term intervention on their part. Let me be clear: We were not seeking a bailout. Only losers get bailed out. IcebergCarwash is cool.

We made the case that IcebergCarwash's failure would not be an isolated incident. Things are very interconnected on this Internet thing. Hence, the frequent use of the word "link." A failure of IcebergCarwash would likely set off a catastrophic chain of events which would result in the failure of an untold number of other blogs, including ones that are favorably inclined toward the President and his administration. Maybe all three of those blogs.

Unfortunately, the government was not swayed. Even when we offered them warrants convertible into as much as 79.9% of IcebergCarwash's equity.

Undeterred, we lobbied the government to give us permission to re-establish the blog as a bank holding company, as they did over the weekend for Goldman Sachs and Morgan Stanley. This would allow us to take "deposits" from our readers, in order to shore up our capital base. No dice.

Finally, at the 11th hour, we were able to come up with an agreement which could stay the blog's execution for a while. In exchange for our acceptance of certain restrictive spending covenants, we were given another 90 days to show a significant increase in our CPP. From time-to-time, we will calculate and publish our CPP, in order to keep everyone updated.

So, the good news is, IcebergCarwash has dodged a bullet, for now.
The bad news is, we'll probably have to forget about those free T-shirts for a while.
And the Super Bowl ad.

"Doctor, is it serious?" "Well, Mr. MBB, it appears as though you have broken your schneid." "Oh, good. Thanks Doc."

The third time was the charm.

After making a change at quarterback (as discussed in a previous post), the Minnesota Vikings won for the first time this season, defeating the Carolina Panthers, 20-10. While a record of 1-2 is nothing to brag about, it certainly beats being 0-3.

The win also brought to mind one of my favorite slang words:

"Schneid."

This is a word that I've only heard in a sports context. It means: a losing streak. The word is typically used when the losing streak ends, and the team is said to be "off the schneid." Alternatively, a team "broke the schneid."

For example:

"The Vikings got off the schneid yesterday, winning their first game of the season."

Or,

"Joe Smith finally broke the schneid yesterday, hitting a double, after beginning the season with 11 consecutive hitless at bats."

I've always wondered where this strange word and phrase come from, and after searching a bit, here's what I found, courtesy of a neat web site named The Word Detective (www.word-detective.com):

To be "on the schneid" means to be on a losing streak, racking up a series of losing, and especially scoreless, games. "Schneid" is actually short for "schneider," a term originally used in the card game of gin, meaning to prevent an opponent from scoring any points. "Schneider" entered the vocabulary of gin from German (probably via Yiddish), where it means "tailor." Apparently the original sense was that if you were "schneidered" in gin you were "cut" (as if by a tailor) from contention in the game. "Schneider" first appeared in the literature of card-playing about 1886, but the shortened form "schneid" used in other sports is probably of fairly recent vintage.

Interesting.

I could write a lot more about yesterday's game, but I need to keep this post short.
I've got to go get some treatment for my broken schneid.

Yankee Stadium is Dead. Long Live Yankee Stadium

Amidst much pomp and circumstance, the New York Yankees played their final game in Yankee Stadium last night. The old stadium, which opened in 1923, will be replaced by a new Yankee Stadium, being built next door with an estimated price tag of $1.3 billion.

As the season progressed, those who were charged with producing the final game spectacle were surely concerned with the potential schedule ambiguity that could arise from the vagaries of baseball's postseason. Depending upon what happens in a playoff series, a team could play its final home game of the year, and not know it at the time. Alternatively, a team could play its presumptive final home game, only to win a game or two on its opponent's home field, thereby prolonging the series, leading to another home game.

If you're an event planner preparing for such a grand extravaganza, it could really put a crimp in your plans.

Ah, but these are the New York Yankees. Exhibiting their trademark flair for the dramatic, the Yankees ensured that last night's game, their final regular season game of the 2008 season, would in fact be their final game at Yankee Stadium. When the playoffs begin in a couple of weeks, the Yankees will be on the outside looking in. This allowed for weeks of preparation for what turned out to be a memorable send-off for the old ballyard.

The team accomplished this by playing generally uninspired baseball from opening day onward. They didn't hit, didn't pitch, or play defense all that well. Sure, there were some significant injuries along the way, which certainly didn't help the cause. But, I can't help but feeling that even the presence of those players would have mattered much.

Typically, when you've got the type of team that only a payroll of $200 million + can afford, you expect that somebody would step up and have a decent year. Then again, this wasn't a typical year. This was the final year of Yankee Stadium, as we were all reminded, ad nauseum, throughout the season. 2008 was a year to be spent dwelling on past successes. No need to accomplish anything in the present, boys. Making a run at a 27th world title would only get in the way of the memories.

I've got two problems with the whole thing:

(1) The Yankees will miss the playoffs for the first time since 1993 (there were no playoffs in 1994, owing to the players' strike). This is all that matters. For a franchise that considers anything short of a World Series title to be a disappointment, missing the playoffs is a downright embarrasment. After such a disaster of a season, I'm really tired of hearing about this "final season in Yankee Stadium" thing. To me, the Stadium is clearly the #2 story here.

(2) Could someone please explain to me why, exactly, the Yankees need a new stadium in the first place? I know that the old stadium isn't the best-looking place around, but as far as I know, it remains structurally sound. Obviously, the absence of more luxury suites hasn't prevented the Yankees from winning over the years. Then again, this has never been about winning. It's about the team making more money.

Far be it from me to begrudge any man (or woman) the opportunity to make money. I'm all for free enterprise. If the Yankees are a big enough draw that they can convince corporations to spend hundreds of thousands of dollars per year for suites, more power to them. However, this new Yankee Stadium is not only being built with private money. The city is kicking in plenty of money of its own, whether in the form of direct subsidies, or in the costs of building the infrastructure needed to support the new stadium. Needless to say, with a massive budget deficit looming, New York City sure could use the money for other, more important things right about now.

Municipal leaders will always chant the familiar mantra. "The new stadium will create jobs. It will pay for itself many times over." These words have been stated in every city where a new arena or stadium has been built or proposed. New stadia are a great investment for any municipality, they'll tell us.

I don't believe it. Just once, I'd love to see someone's numbers. After all, if a city is so certain that a stadium will pay for itself, why not make your economic projections available to the public? Wouldn't that stop the dissenters right in their tracks?

While I think that would be a good idea, I won't hold my breath waiting for anyone to actually do this. If they did, we'd probably see the kinds of outlandish assumptions they needed to build into their models to make them work. Unless you also believe that, for example, a rust-belt city will suddenly go through a 10-year period of economic growth that would make China jealous. Or, that in the presence of a gleaming new stadium, the drug dealers, gang members and general urban decay that for decades have marked the neighborhoods in the stadium's immediate vicinity will suddenly disappear, to be replaced by high-end retail establishments, restaurants and hotels.

In the meantime, the Yankees will move into their new palace of a stadium. Lost among all the oohs and ahhs will be the fact that very few "regular people" will be able to afford to attend games (this has really been going on for the past several years, even in the old place). Eventually, someone will realize that the place has a really sterile feel about it, and the games have become more of a social event than anything else.

There will be as many gossip columnists as sportswriters in the press box.
The concession stands will sell stocks and bonds. (If you don't have enough money to buy a 20-ounce bottle of Coke for $5.00, you could always buy a share of AIG).

Me? I'm just going to stay stay home.

As for the Yankees, hopefully they'll soon return to the World Series...where they belong. Then, maybe, I'll watch the ceremony.

It's The Destination Not The Journey...Which is Good,Cuz It's the Trip From Hell

Ahhh, another Fall Sunday. Football up the wazoo, pennant races heating up (not for the Yankees though, they're too busy boo-hooing a stadium they chose to leave so they could ramp up season ticket prices, add luxury boxes, and charge millions to companies to anchor various signage areas), and the weather was a glorious September summer day.

I think that the usual slight chill in the air was missing. The briskness that tinges the edges of each breath, the clear smell of an early autumn afternoon that invigorates as it cools was certainly lacking. Not that I'd know either way.

MBB mentioned last night that he had the unenviable task of cleaning up the garage after two months of bike storage, Costco purchase build-up, school supplies (on sale at Wal-Mart since JULY!) an errant van seat (that was actually gone a few weeks ago)and a few other itinerant odds and ends. As they say (or at least I do), neat begets neat. Alas, Mess begets Mess as well, and this mess was quite fertile indeed.

I really wasn't trying to compete with him (generally, it's a futile proposition) in the Worst Tasks to Complete on a Sunday or Ever games. But I won. Hands down. And I didn't even fully complete it.

What, you ask was this most horriffic of chores that keeps me up nights -weeks in advance, and mocks me for months on end until I finally succumb and get down to it? What could possibly put me over the edge so desperately that even if I'd only work for ten minutes I'd feel, UGH, just Ugh?

Sorting the kids' clothes. By Season, Size and Time for Goodwill. This has to be the worst job I can think of in my house. It's worse than shopping with my kids for new clothes. It's worse than cleaning up poop or throw up from the floor. It's the worst. Why? Why is it so bad? Lots of reasons. The main ones that stick out are:

a)If it's so cute and I've kept it so long how could I get rid of it now syndrome

b)What if one of them WILL wear it, even though no one has or has been willing to in the last, oh, seven years or so.

C) The volume. When you have lots of kids, all the same gender, they all need some new stuff every year, because they really don't want just a hand-me-down. So you get a new outfit or two, and suddenly they can manage very well on just those two outfits. So the old stuff just sits. The longer it just sits the less wear and tear it has, and the less wear and tear the longer you're likely to keep it.

Really, I sometimes think I'd like to chuck it all ( to someone needy, I wouldn't just throw it out), and start again.

I'll say what those Yankees are saying: Maybe next year.

A Very Special Episode

Here at ICEBERGCARWASH we like to shake things up a bit. So, today, we present you with a guest contributor. As per all things of this nature, ICEBERGCARWASH does not neccesarily endorse, agree or disagree with the contents of this post. And we promise, no one will get drunk, or abused, no parents will divorce, and no main characters will die.....Happy Reading:

The political-financial news becomes more unbelievable every day. The week started out with the blockbuster collapse of iconic Lehman Brothers and the apparent unwillingness of the federal government to stay the event. At the same time, the other shoe, so to speak, was ready to drop. The market reacted in expected capitalist fashion, punishing the bad guys for their poor judgement and finding safer places for their money. Then Richard the Lion hearted comes back to England and saves the country from the evil John Lackland. The federal government decides that AIG is too big to fail and lends it $85 billion dollars in exchange for hefty interest and 80% ownership of the company. Hank Greenberg has the effrontery to wail about “nationalization” while this is the one thing protecting him from the consequence of his buccaneering.

The market is not impressed, realizing that this is just a band-aid and reacts in expected capitalist fashion, punishing the bad guys for their poor judgement and finding safer places for their money. In fact the market is now in panic mode. It continues into the next day, when a late day rumor that the results of all the risks, gambling and irresponsible financial behavior that has enriched many thousands with tens and even hundreds of billions of dollars but has left many investors holding the empty shells of once solid companies, will have no impact on either the risk takers or the investors because the poor beleaguered taxpayers of this country will take all the losses and the perpetrators can keep all their gains. Sort of like OJ Simpson being acquitted and the Goldmans and Browns staring forlornly at Lance Ito.

Is this capitalism?

Let’s go back a bit. Comrades Bush and Paulson felt they should shore up the capital markets by guaranteeing Morgan’s purchase of Bear Stearns at a price that Morgan would probably consider their greatest coup even without the federal guarantee. The professionals of Wall street must really have been laughing up their sleeves at the Soviet style federal incompetence. Then the Saturday night (or Sunday morning) massacre which was the Mexican style takeover of Fannie Mae and Freddie Mac actually got the approval of the vast majority of Americans. Shame on them. You see how greed, the result of corruption, breeds more corruption. At this point, I don’t know what caused the government to sit out the Lehman bankruptcy (anti-semitism some will say) but AIG really was a problem and everyone knew it. If AIG failed it really would bring down the whole house of cards, built on the foundation of free money distributed to anyone who asked for it, no questions asked, as long as there was a piece of real estate, regardless of value, attached to the request. So comrades Bernanke and Paulson, once again decided to open the coffers of the federal government to immunize the financial community from being responsible for their actions. And now, ultimately, seeing that Bush, Bernanke and Paulson are now committed to state capitalism (a la Nazi Germany) they will relieve everyone from further responsibility or culpability for years of criminal mismanagement of funds entrusted to them by others. The taxpayers will again, after only about 30 years, have to pay for losses caused by others even though, at the time of the S & L crisis, we swore it wouldn’t happen again.

Let me remind you of the S & L crisis and its aftermath. It started out the same way as the current crisis. Too much money lent on inadequate collateral. When the government’s Resolution Trust took over, it cost the taxpayers about $80 billion dollars and many of the properties were sold at about 5% of their values, making some individuals and corporations very rich. The government shouldn’t be in business and business should not be involved in public policy.

It’s time for the people who make the mistakes to pay for them themselves, not to slough it off on others. Let them go bankrupt. Let them suffer from their self-inflicted wounds.

Ah, but you say, “where will the liquidity come from?” A good question to which I have a good answer. Every business needs liquidity and the bigger the business, the more cash it needs. The imminent collapse of AIG was perceived, rightly, as a disaster which could bring down the whole structure of corporate America and even the world global economy. The last time I looked, companies like GE, GM, Verizon, Caterpillar, Boeing, Microsoft and thousands of others were still paying dividends to their shareholders. So, seeing that these companies’ welfare is directly related to the need for financial sector companies to keep running, the dividends should be diverted from the shareholders to help shore up the banks’ balance sheets. The taxpayers would not have to pay for business incompetence and those responsible would hurt a bit.

In capitalism, there are rewards for being right, but there has to be pain for being wrong.

-fil

Don't Sell Yourself - Or The Bank - Short

Before dawn on the East Coast of the U.S. this morning, the Securities and Exchange Commission (SEC) issued a temporary ban against short-selling. Specifically, the SEC's statement said that it is halting short selling on 799 financial stocks. The ban is designed to be temporary, with an initial effective period of 10 days, and a possible extension to 30 days.

Short selling is really not that complicated. It involves betting on a decline in a stock's value, by selling stock at a certain price, in the hopes of buying it back later, hopefully at a lower price. Look at it as the reverse of the typical set of transactions, where one buys a stock, in the hope of a price increase, and a subsequent sale of that stock at a higher price. Instead of "buy low, sell high," the short seller wants to "sell high, buy low."

The art of selling stock short is about as old as the markets. In the 19th century, when our stock markets resembled the Wild West, and stock price manipulation was the order of the day, short sellers and those who owned the company's stock often waged fierce battles. Whenever there was a large short interest in a stock (many shares had been sold short), others would try to "squeeze the shorts" by "cornering" the stock, i.e. getting their hands on all of the available stock of the company in question. Consider that a short seller was selling stock that he/she didn't own. At some point, he/she must buy it back. If someone would corner the stock, the short seller would have no option but to pay whatever price the owners of the stock wanted in order to buy back the stock, usually incurring enormous losses in the process. "Squeezing the shorts" was as painful as it sounds.

Daniel Drew, a legendary (and much-reviled) stock trader in the latter part of the 19th century, was known primarily as a short seller, but was involved on both sides in several corners and attempted corners in his time. Supposedly, when he was on the long side of the market, and in the process of extracting a terrible price from short sellers, he would recite the following witty verse:

"He who sells what isn't his'n,

Must eventually buy it back, or go to prison."

Selling stock - or any security - short has never been for the faint of heart.

I understand that the SEC believes that it is acting in the public's interest in banning short selling in certain stocks for a little while. I disagree.

Once again, it appears as though we are falling into a trap, by making short sellers the scapegoats for the nerve-wracking declines we've witnessed in the shares of financial company stocks.

Blaming the short sellers for all of society's ills is nothing new. For the past two hundred years, officers and directors of companies whose stocks took a beating would often blame the decline in price on the short sellers. In the 19th century, they'd refer to it as a "bear raid."

Speaking in indignant tones, the company leaders would say, "Amalgamated Tobacco and Snuff is as robust an enterprise as it has ever been, with ever-rising profits and ever-brightening prospects. The recent weakness in our shares is the result of the scurrilous acts on behalf of the unscrupulous bear camp. Despite the worst efforts of these scoundrels, AT&S will prosper."

Or something like that.

Meanwhile, in a few weeks, or months, the public would find out that the company was in fact experiencing deteriorating business conditions. Sometimes, the officers and directors of the company were secretly sticking their hands in the company till. ("T'was an act of desperation, your honor. I was short of greenbacks, and Mabel needed a new gramophone.")

This kind of scenario has repeated itself on many occasions over the years (maybe not the gramophone part). Short sellers have often been blamed for hurting a company's stock, when in fact, the real issue was with the company's fundamental business.

Anyone who is interested in an interesting book on the subject, from a short-seller's perspective, should read "Fooling Some of the People All of the Time: A Long Short Story," by David Einhorn. In the book, Einhorn, who runs a hedge fund called Greenlight Capital, details what happened when he shorted Allied Capital.

I had the opportunity to meet Einhorn a few years back, and found him to be a thoughtful fellow.
You'll probably continue to hear his name quite a bit in the near future, as he gains notoriety. He was very publicly bearish on Lehman Brothers a few months ago.

Understandably, short sellers aren't always correct. Presumably, they're wrong at least as often as they're right, just like anyone else. However, I think that it's a fallacy to think that short sellers are responsible for systemic weakness in the market.

In our current situation, can we really blame the short sellers for the ills of Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Washington Mutual and all of the others? These stocks cratered in response to a significant deterioration in the underlying companies' fundamentals. They made bad loans, bought toxic securities, leveraged themselves to the hilt, and shredded their balance sheets in the process. For the most part, the declines in their stock prices reflect the catastrophic value destruction in which the geniuses who run these firms engaged.

Does anyone really believe that short selling did this, or that restricting short sales will help these stocks recover over the long term?

Now, the SEC, and those who support its decison, would probably say that the intent here is simply to reduce the volatility we've seen in these stocks, and the market in general. By removing the short sellers, who can put major short-term pressure on a stock price as they're building their positions, and perhaps even greater upside price pressure on a stock when they cover, we will be able to avoid the sharp, intraday price swings we've seen this week in many of these securities.

However, there's no real long-term, empirical evidence that short selling adds volatility, or that its restriction would reduce volatility. Sure, people might look back after this 10 or 30-day short-selling ban ends, and compare the market's calculated volatility of that period with some prior period, and say that things became less volatile. Even that outcome, if it in fact occurred, wouldn't prove anything. If the market is less volatile next week, and the week after that, it's more likely the result of all of the other steps the government is taking to stabilize things, such as guaranteeing the value of money market assets.

I simply don't like a situation where only speculative buying is allowed, not speculative selling. It creates an artificial imbalance between buying and selling forces, giving the market an upward bias. Absent an improvement in fundamentals, however, this bias is sure to be short-lived. It's unfortunate that the SEC, which has seemingly been on vacation for the past several years, has fallen for one of the oldest tricks in the book.

Either way, the stock market will eventually find its own level. Hopefully, that level is higher than where we are now. I'd love to get my hands on one of those new I-Gramophones.

With Apologies To Arnold Fine

I think of MBB's posts as similar to eating Cracker Jacks. There you are happily munching away on your caramel popcorn, when lo and behold! There's a great prize in there. That's the reward for sticking it out as the toffee adheres to your teeth and the popcorn gets caught between them. There's a reward! And you didn't even know it was coming...at least the first time. Maybe it's more like a grab bag, because each time is different. You really never know if it'll be a post with a great pay off if you're the one who ends up with the number slide. ( You know that stupid thing where you have to put the tiles in order by sliding them around, til you get so frustrated you break off the pieces and place them back in in the right order).

Then there's this blog itself. If a tree falls in the forest and no one is around to hear it, does it make a sound? (yeah, yeah, I know all you brilliant people are going to chime in about sound and vibration and interpretations...it's a saying, get over yourself). Is anyone even out there? Are we shouting in the wind?

There were other things that came up, but see it's kinda like a colander......

Henceforth, We Are To Be Known As Mr. MBB and Lady FBB

A strange thing happened over the past 24 hours here at IcebergCarwash. FBB and I used the same word in separate posts, but spelled it differently.

In my post earlier today, entitled "The Czar Would Be Proud," I wrote "...the always-looming specter of capricious government intervention."

In a prior post, entitled "Is It The Economy, Stupid?" FBB referred to "The frightening spectre of Obama..."

Same word, different spelling.
So, which one of us is right?
Actually, they're both correct.

"Specter" is the American spelling of the word, while "spectre" is the British spelling of the word.

I was considering giving FBB a hard time about using the British spelling, but I didn't. Such a manouvre on my part would be instantly recognised as a poor attempt at humour. I realise the extent to which FBB has laboured to make this blog a reality, even to the extent of choosing - and editing - the colour scheme. It has also been a great honour for me to write for IcebergCarwash. Indeed, it is one of my favourite activities. The last thing I want to do is turn this blog into a theatre of the absurd.

Over the long term, such spelling diversity will only enhance this blog. As the blog's readerhip expands, our readers on the other side of the Atlantic will be sure to find comfort in the familiar spelling style.

So fetch us some tea, won't you, Sebastian? IcebergCarwash is going global.
And don't be stingy with the biscuits.

Thanks, Guv'ner.

Are They Reading This in Minnesota?

Events of this past week have made me wonder if IcebergCarwash is becoming more widely read. And influential. Particularly among the decision makers in the National Football League (NFL).

Here are the facts, in chronological order:

• On Sunday afternoon, the Minnesota Vikings lost to the Indianapolis Colts, and saw their record drop to 0-2.
• Despite another poor showing by quarterback Tarvaris Jackson, Vikings head coach Brad Childress indicated that he wasn't planning to make a change at that position. These comments were made to the assembled media shortly after the game, on Sunday afternoon.
• On Monday, in his weekly day-after-the-game briefing with the media, Childress reiterated his commitment to T-Jack as the Vikings' starting quarterback.
• Later on Monday, IcebergCarwash published its post ("That Slinky Won't Slink"), blaming the Vikings' anemic offense on Jackson, and questioning whether or not Jackson was capable of leading the team.
• On Tuesday, Childress appeared to change his tune, indicating that he still had some decisions to make regarding the quarterback position. It represented the first time that the coach had publicly wavered in his support for Tarvaris Jackson.
• Finally, on Wednesday, Childress surprised many observers by definitively benching Tarvaris Jackson and naming Gus Frerotte as the Vikings' starter, for the remainder of the season (or until he gets hurt, whichever comes first).

Why the sudden change of heart, Coach Childress? Could it be that you were swayed by a certain blog? Actually, a certain brother of MBB suggested that this might be the case.

Whatever the motivation, I think that it was the right move at this point. While I continue to believe that T-Jack possesses significant upside as a player, he's clearly not there yet. At this stage, he's hurting the team, as the coaches seem afraid to open up the offense with him at the helm. FBB has noted that the Vikings need to throw the ball deeper downfield with greater frequency. For that reason alone, I think that the switch to Frerotte will be beneficial.

I wouldn't get too excited about the Gus Frerotte regime, however. He's a career backup, who has never thrown more than 18 touchdown passes in a season. He's bounced around the league, having played for 7 different teams (this is his second tour of duty with the Vikings; he played in Minnesota in 2003-04), and has never held a starting job for long. He's 37 years old, making him one of the oldest quarterbacks in the league. Since the Vikings signed him as a backup this offseason, we keep hearing about his still-strong arm. That's like when they tell you a 90 year-old person still has most of his faculties. Sure it's impressive, and the guy might be the envy of the nursing home, but if need be, you could probably win a wrestling match against him. Especially if it was a first-one-to-three-pins match. In a first-pin wins situation, anything could happen. Sure the guy is old, but he might be pretty slippery.

If that weren't enough, consider that to this day, Gus Frerotte is best known as the guy who hurt himself by slamming his head into a wall celebrating a touchdown. I'm serious. You could look that up.

My point is, although there's no telling whether or not the Vikings will see an upgrade at the quarterback position, this was a move that had to be made.

So, does the coaching staff of the Minnesota Vikings read this blog? I'm not really sure. But, just in case they do...

...Hey guys, how about winning this Sunday for a change?

The Czar Would be Proud

Lost amidst all of the chaos in the U.S. markets this week is the performance of the Russian stock market. While our markets have been extremely volatile, with a 5% decline on Monday followed by a decent rebound on Tuesday, and then another 4.5% drop on Wednesday, the Russian markets have seen an absolute meltdown.


On Tuesday, the major Russian stock market indices, the RTS and MICEX, sank by a whopping 12% and 17%, respectively. Even for the notoriously volatile Russian markets, such a move is noteworthy. It represented the largest one day decline since 1998, during the crash in the Ruble's value. The government suspended trading early, in order to stem the decline. On Wednesday, amid a further drop, trading was suspended again, and the Russian markets are now not expected to resume trading until Friday.

Of course, this really isn't that surprising. First of all, Russia's economic system in recent years has resembled what I would call "frontier capitalism." Great wealth has been created, within an ethically ambiguous environment. According to Forbes, Moscow now boasts more billionaires than any other city in the world, with 74. New York City is second, with 71. As a nation, Russia claims 87 billionaires. While that's still a far cry from the 469 U.S.-based billionaires, it still ranks Russia as #2 on the list. Not bad for a country that was operating under a socialist economy less than 20 years ago. Interestingly, the average age of the Russian billionaires is only 46. Also interesting, and rather troubling, is the fact that 12 of the aforementioned Russian billionaires are members of Parliament. Hmmm. Perhaps it really is all about "who you know," not "what you know" in the former Soviet Union.

Fueled by all of that new-found wealth, Moscow now ranks as the most expensive city in the world, according to a study which looks at everything from average housing prices to the cost of a taxi. Unfortunately for the average Yuri and Svetlana on the street, however, this has not been one of those a-rising-tide-lifts-all-boats types of growth stories. For every "have," there are millions of "have nots."

Any time you have rapid wealth creation, where that wealth is concentrated in relatively few hands, with the always-looming specter of capricious government intervention, you're bound to get volatility in your financial markets.

Another factor which makes financial crises in Russia more apt to be large is the fact that these people make a big deal about everything.

The phrase "over the top" doesn't translate into Russian. This clearly manifests itself in Moscow, which undoubtedly has more statues per square foot than any other major city on Earth. If you're Russian, and you've ever done so much as written a limerick, there's probably a statue of you somewhere in Moscow.

Russian architecture is another example of how these people do things. With the exception of the 70 or so years during which the Communists were in control, and erected these massive, plain, utilitarian buildings, everything the Russians build seems to be way overdone. There's so much ornamentation and detail. Everything, it seems, is built on a grand scale.

Well, not exactly everything. On my first (and hopefully last) visit to Moscow, a few years back, I found myself in a decent-looking building, and in need of the rest room. Looking around, I noticed a sign, which included that familiar stick figure, denoting the men's room. Relieved that I wouldn't have to try to actually get directions from a Russian, I went inside.

Big mistake.

See, in most of the world, that stick figure means that the adjacent room is a men's room. It's really a universal symbol. Unfortunately, unbeknownst to me, in Russia that symbol apparently means "the gates of Hell." Words cannot accurately describe the horrifyingly disgusting state of that place. Let me just say that if I were a CIA operative, and had been captured by the KGB, and they took me to that room for interrogation, within 5 minutes I'd have given them the names, addresses, home phone numbers, cell phone numbers, fax numbers and e-mail addresses of every single U.S. government employee I knew. I'd even have downloaded Mapquest directions to their homes. And their vacation homes, in case they might be away. Heck, I'd do what I could to get them Super Bowl tickets. Just don't make me go back in there.

That's the way it works here in Blogadishu. We share. My deep, emotional scars are your deep, emotional scars. Enjoy.

So listen here, Alexei. How about you and your nouveau riche buddies get together and spend a few rubles sprucing up the public bathrooms a bit? Maybe then, I'd start to take you all a bit more seriously.

For now, I think that investing in Russia should be left to the locals, or to those entities who are large enough to diversify their risk across dozens of countries while still investing with scale. As far as the rest of us are concerned, I'd avise steering clear of the Russian stock market

...and their public bathrooms.

Is it the Economy, Stupid?

I'm so happy for MBB that we started this Blog at a time when economic news headlines are all the rage. Not that he would not have had a vast amount of material from which to elucidate and educate and entertain, but this has certainly kept him busy, and somewhat kept his mind off a certain Non- Quaterback in Minnesota, which in turn has kept his mind off a certain Not Going to the Playoffs for the First Time in 14 Years Team in New York. Which is not to say that he is easily distracted, but let's keep in mind it is an election year. And the Economy will obviously loom large.

Hopefully, the fear of Al Qaeda, Iran, and issues with Russia will all serve as weighty enough that Americans will realize that punishing the party in power's candidate will not help the country. It will just make half the country think they feel better.

The frightening spectre of Obama is not just his foriegn policy agenda of everyone starting with a clean slate with him. His economic policies are based on class warfare, and defining who is wealthy. At a time when Americans are hurting economically, how does talk of tax increases help the country? It will certainly help elect him, but having the truly wealthy shielding their money so that they are not liquid enough to spend it, while the rest of Americans are just trying to have enough to buy bread and milk, will certainly not stimulate the economy.

I'll Gladly Pay You Tuesday For a Bailout Today

Perhaps we should change the United States' national bird (and national emblem) from the Bald Eagle to the Vulture.


The Fed's bailout of AIG, announced last night, gave rise to continued debate about when the government should or shouldn't intervene in financial crises. Putting that argument aside for now, one thing is clear:


The "bailout" of AIG is not exactly a sweetheart deal for the company.


Consider the terms. The government is lending AIG $85 billion for two years, at an interest rate that amounts to about 11.5%. In addition, the government receives warrants which, if converted, would result in a 79.9% ownership interest in AIG. In addition, the government has the right to replace existing management, and has already taken its first step in that direction, by replacing AIG CEO Robert Willumstad with Edward Liddy, former head of Allstate Corp.


I've seen terms like this before. Back in the early part of this decade, when dozens of telecom companies were running out of cash, they cut deals with so-called "vulture" investors, who exacted the types of terms the Fed has gotten from AIG. This is really a classic vulture deal. A well-above-market interest rate, and massive dilution of the existing shareholder base. Clearly, the current shareholders realize this, as despite the avoidance of a possible bankruptcy, AIG's shares are down another 40% today.


As noted in an earlier post, any government bailout of AIG essentially comes out of the taxpayers' pockets. As such, I must say that I think the government did a pretty good job of getting us good terms on this deal. I'd expect that the taxpayers will actually see a tidy profit on this transaction (not that we should expect to see a penny of it, of course).


The thing that I'm wondering is, why wasn't the private sector interested in a deal like this? We know that the Fed first attempted to arrange for banks to come up with this money, before stepping in as a lender of last resort. Some are saying that it's an indication that this deal is not a very good one, in fact, for the government. After all, the thinking goes, if it were such a good deal, the banks would've been all over it.

I'm not buying that line of reasoning. Sadly, there are only a few entities right now with the financial wherewithal to participate in a loan of this magnitude. Presumably, there was no appetite for a loan that would've been comprised of about $2 billion apiece from more than 40 entities. That's way too cumbersome a consortium to put together on such short notice. So, let's assume that in order to get in on this deal, you'd have been required to put at least $20 billion on the table. With even the larger banks looking to spruce up their balance sheets, how many companies have that kind of stash? In addition, any company that does have that kind of money is going to hold on to it for a little while, in seeking out all of those assets which will surely be available at fire sale prices in the coming weeks and months. Double-digit returns are nice, but I think that these guys are shooting for 30%+ ROIs as they buy assets from distressed companies. Only time will tell whether or not they're successful, but it makes sense to hold out for something better at this time.


As for me, I'd be perfectly happy not to have to hear the word "bailout" (or, for that matter, the phrase "out on bail") again in connection with a major company for a very long time. Somehow, though, I don't think I'll get my wish.

Too Big to Fail? Too Fat to Fly?

From where I sit here in Blogadishu, it seems as though we're completely awash in economic indicators of one sort or the other.

There's the Consumer Price Index (CPI) and the Producer Price Index (PPI), which illustrate trends in retail and wholesale inflation, respectively.

We hear about the number of people who are working, hourly wages, jobless claims and the unemployment rate.

There are several housing related statistics: House price indices, the number of home sales (both new and existing), permits for new home construction.

We're told about the money supply as well, measured in several different ways.

One indicator I've always been interested in is the University of Michigan's Consumer Sentiment Index. Using 1966 as its baseline year (with an initial value of 100), this index attempts to measure the overall mood of the U.S. Consumer, using it as an indicator of future economic activity. This indicator, which rarely moves markets one way or the other, is nevertheless widely followed by the media.

While I appreciate the idea behind this index, I've long wondered about its ability to tell us anything. Sure, consumer sentiment is important, but I'm not sure that you can gauge it by simply asking people about how they feel. Wouldn't some sort of measurable action, on behalf of the masses, which indicated their feelings about the future of the economy, be a better indicator? But what form would it take?

Then, out of the clear sky, it hit me. Actually, fortunately, it just missed me.

The pigeons hold the answer.

Yes, pigeons. Those dirty, disgusting, ubiquitous, statue-soiling birds. The unofficial state bird of New York.

Several years ago, at the height of the economic boom, FBB and I noted how enormously fat the pigeons we saw in Manhattan were. They were obviously very well fed. Well, I noticed something interesting the other day. The Manhattan pigeons aren't nearly as fat as they used to be. Many of them are positively svelte.

This can only mean one thing. People are feeling a lot less secure about the economy nowadays, so they're tossing away fewer scraps. There's less for the pigeons to eat, so they're not as fat.

By creating an index of pigeon weight, or by measuring the proportion of fat pigeons as a percentage of the total visible pigeon population, we will have a quantitative indicator of how people feel about the economy at a given point in time.

I'll call it the Fat Pigeon Index (FPI), or perhaps the Pigeon Fat Index (PFI). I'm not sure which one I'll use. I'll be sure to trademark both names and acronyms, just in case.

It will take some time, and some empirical data, to determine this index's efficacy as a predictive tool, but at the risk of sounding immodest, I'd say that this Index represents the most important economic innovation since the Black-Scholes options pricing formula.

This is very exciting, and I could blog about it all night. I've gotta run, though. I need to practice tying a bow tie before the Nobel Prize presentation ceremony comes along.

Change'll Do You Good

It's the season of reflection. A chance to look at our lives, see what we want to change, and embrace the opportunity. It's easy to get caught up in all the missed opportunities a change now would mean. First, in our minds it could help to diminish or detract from past experience if we slowly change the way we do things. Second, change is hard.

But neither is a good reason to resist. There are ALWAYS reasons to resist. The status quo is comfortable, the current way is easier, more fun, or just , at this point, a set pattern in our lives. But that's not good enough either. There comes a point in our lives when we just say ENOUGH. I need to stop talking about this and just do it. It's going to be hard, and my life will change, but hopefully for the better. It doesn't mean there won't be lapses and relapses, but just because something is difficult that doesn't mean you shouldn't do it. Sometimes it's just a matter of focus. If I go on a trip and I hate packing, I can't focus on the packing as a task in itself, but a means to an end. The packing facilitates the trip.

Man, I should gotten a blog a long time ago.

FBB

For Just the Price of a Starbucks Latte', You Can Save AIG

Remember those old "Save the Children" commercials?

A very bloated Sally Struthers implored people to give money to save starving children in Africa.
The main hook was something to the effect of "For just the price of a cup of coffee a day, you can save a child."

Wait, that might have been a different late-night TV charity, but you get the point.
The idea was, set aside some of your coffee money, and you can save the world.

I, for one, never felt compelled to give to those charities, for a couple of reasons:

(1) I've never been a coffee drinker. So, in order to help those kids out, I'd have to give up something even more important, like bubble gum perhaps.

(2) Have you seen Sally Struthers? Forget the cup of coffee. If she had only scaled back a bit at the buffet table, she could have single-handedly saved much of Sub-Saharan Africa.

Fortunately, most people in this country are more generous than I am, so the campaign was a major success. In fact, given the skyrocketing price of coffee, I've been told that some of those African kids now spend their time jetting around on their private Gulfstream 4 jets, going from one home of theirs to another. Good for them. They seemed so sad on TV.

Well, it looks as though we're going to need to tap into the generosity of the American public yet again.

AIG (American International Group), by some measures the world's largest insurance company, has spent the past couple of days frantically attempting to raise cash to meet its short-term needs. Apparently, they need oh, say, about $75 BILLION, just to tide them over. The problem is, the company can't seem to get anyone to spot them the money, and has asked the U.S. Government to help them out. That option is still being considered, and the latest reports, as of about an hour ago, indicate that the government might engineer some sort of bailout, whereby the government simply takes over the company.

I won't get into when it is, or isn't, appropriate for the government to intervene. I will say that a collapse of AIG would be an absolute disaster, considering the amount of insurance they've underwritten. Despite the current overcapacity in many insurance markets, it would be near impossible to replace AIG as an insurance underwriter in the short term, leaving millions of customers exposed to risks they have always been able to insure against. Of course, if there was a way to insulate the insurance subsidiaries from the parent company's troubles, and let the parent go bankrupt, that wouldn't be nearly as big a deal. In my opinion, that's not a bad solution.

Of course, there is another option, and this is where the average American comes in. By my calculation, if every man, woman and child in America would simply pony up $250 apiece, AIG would have its $75 billion. Imagine, for just the price of one extra grande vente latte' thing, once a week for an entire year, we could save the world's largest insurance company.

We can do this, people!

And, if that sounds like a major price to pay, consider this: If the government ultimately bails out AIG, who going to pick up that tab?

Every man, woman and child in America.

Forget the coffee. I think we all could use a beer.

The View from the Street

Since I work in Manhattan, and I'm aware of the fact that so many of you rely on this blog for most, if not all, of your information, I felt obligated to give you a feel for how things are going here today, amidst the financial turmoil.

I just returned from the store, where I purchased a bottle of Diet Sunkist Orange Soda. Perhaps I shouldn't call it a "store." When you pay that much for something, the place at which the purchase is made should probably be referred to as a "dealership." Then again, Diet S.O.S. is pretty cheap for an energy drink, and at least as effective, so I shouldn't complain.

Anyway, having been out and about for a few minutes, I can tell you that there is definitely a pervasively downbeat mood in Manhattan today. In fact, I think I saw a guy sitting on the Street, wearing a suit, and holding a sign which said "Will securitize, for food."

Of course, the reality is that the failures - and pending failures - of our large financial institutions is no laughing matter. Tens of thousands of people will lose their jobs, which is incredibly sad. The aftershocks will be felt far and wide, perhaps in the form of higher taxes, as municiplities attempt to close the budget gaps they will most surely face. This is clearly not our happiest time.

Despite the gloom, it appears as though the tourists are still around. They chat loudly as they walk through midtown Manhattan, still amazed that their stinky little Euros (or pesos, or whatever) can buy them so much here in America.

Now, I don't have a problem with that. Certainly, now more than in a very long time, New York needs the money that tourists pump into our economy. There's only one little issue.

Why do they walk so darn slowly?

If you've ever been stuck behind a pack of tourists, walking t a snail's pace, seven abreast down the street, so as to completely block everyone else's path, you'll know what I mean.

Listen here, Jean-Luc and Ghislaine, we've got a certain pace here in New York, and we'd appreciate it if you didn't come here, and attempt to impose your ways upon the rest of us, by slowing us down.

Look at it this way, we don't show up in your country and make you take showers or anything.

So pick up the pace, Umberto. And feel free to take advantage of our wonderful hotels and restaurants. Oh, and you must try the orange soda. It's excellent here.

That Slinky Won't Slink

It's amazing that this blog has been up-and-running for about five days, and I haven't yet written anything about football. That's about to change. Yesterday, my favorite team, the Minnesota Vikings, lost a game in particularly heartbreaking fashion, blowing a 15-0 lead, and losing 18-15 to the Indianapolis Colts. The Colts' winning points came on a field goal with only three seconds remaining in the game.

Now, in a season during which the Vikings were widely expected to make the playoffs, they have started 0-2. A season of great expectations seems headed down the tubes, almost as soon as it began.

As a fan, it is my obligation to assign blame. Why has this happened? How have things gone awry so quickly? The defense has played well, absent a couple of lapses, which are to be expected of any team. The offense has done a good job running the ball, which remains one of the team's strengths. However, the passing game has been dismal, much like it was last year. The problem, therefore, in my opinion, boils down to one man: Tarvaris Jackson, the Vikings' quarterback, known by many as "T-Jack."

Admittedly, the play-calling has been suspect, and the receivers certainly haven't helped T-Jack out. However, the quarterback is the most important player on the team, and when he's not playing well, the entire team suffers. We're seeing that right now with the Vikings.

T-Jack has been a terrible disappointment so far. Of course, he wasn't very good last year, either. However, along with so many other Vikings fans, I spent the entire offseason convincing myself that he would be much improved in 2008. He's very gifted physically, has a great work ethic, and as a young quarterback, entering just his third year in the league, all he needed was a little bit of experience. Now, it looks like we were wrong. He's terrible, and I'm beginning to wonder if he'll ever develop into a solid NFL quarterback.

I've been trying to determine the last time someone or something disappointed me as much as T-Jack. After much pondering, I had my answer:

Tarvaris Jackson is The Slinky.

Anyone over the age of 25 remembers the Slinky, one of the most popular toys of all time. It was a metal spring, which could do all sorts of things. Or so the commercial implied.

You remember the Slinky commercial don't you? For one thing, it featured a very catchy jingle, which went a little something like this:

Slinky, Slinky, what a wonderful toy,
Slinky, Slinky, it's fun for a girl and a boy.

...or something like that.

If this blog accomplishes absolutely nothing (a pretty safe bet) other than to ensure that anyone who reads this post will be hearing that Slinky jingle in his/her head on a constant loop over the next 24 hours or so, I will feel as though we have changed the world for the better.

Snappy jingle aside, the most powerful part of the commercial was the demonstration of the things that Slinky could do. While cute-as-a-button Jane and her little brother William looked on in wide-eyed amazement, the Slinky did all sorts of neat things, including walking down a flight of stairs.

This was amazing. I needed to have a Slinky. At the time, you could get the Slinky for about 79 cents. A pretty good deal. Of course, that can't compare to when my parents were kids, when you could get a loaf of bread, a dozen eggs, two gallons of milk, a newspaper and membership to a health club for the grand total of a penny. But, it was still a pretty good deal.

Slinky in tow, I set about trying to teach it all sorts of tricks. The problem was, my Slinky didn't do anything. It just sat there. By now, the commercials were even more amazing. The Slinky went down the stairs, and made its way into kitchen and over to the stove, where it prepared perfect sunny-side up eggs. Without ever breaking the yolk!

Still, my Slinky did nothing.

I decided that I probably just had a defective Slinky, so I tossed it in the trash and bought another one. At the time, my allowance was 50 cents a week (about $45,089 in today's dollars), so buying a new Slinky meant spending about a week and a half's worth of allowance. That was a lot of baseball cards. It was an early lesson in the important economic concept of opportunity cost.

Again, however, my Slinky did nothing.

Menwhile, the makers of the Slinky continued to up the ante with their commercials. Now, at approximately 5PM every day, the Slinky walked down the stairs, and over to the bar, where, just in time for cocktail hour, he prepared a scotch-on-the-rocks for Mr. Smith, and a perfect martini for Mrs. Smith. Sometimes, he would toss on his old Princeton sweater, and engage in light-hearted banter with the Smiths. ("Great martini, Slinky. And that sweater still looks fabulous. Why, it looks like you haven't gained an ounce since college. How do you do it?")

Meanwhile, I was on my fourth or fifth slinky by now, and I still wasn't getting any results. To make matters worse, I got my finger caught in the coil, and had to walk around with this thing dangling from my hand for a couple of hours.

Despite my terrible experience with it, the Slinky became even more popular, and was marketed to an ever-broadening audience. Originally marketed as a toy for suburban children (they generally have staircases in their homes), the Slinky now took on a more urban appeal. Soon, Slinkys were slinking down to the corner store, picking up 40oz. bottles of malt liquor. ("Yo Slinky, where my 40 at?"). There was even an unconfirmed rumor that a Slinky had been involved in a gang-related drive-by shooting in Los Angeles. I imagine that the conversation at the local LAPD precinct went something like this:

Lieutenant: So, detective, do you like anyone for that drive-by shooting in Watts last Thursday?
Detective: Yeah, actually, I've got a lead.
Lieutenant: Who is it?
Detective: A Slinky, sir.
Lieutenant: You think that a Slinky did this?
Detective: Well, I'm pretty sure he wasn't the trigger man. I just think he was there, is all I'm sayin'.
Lieutenant: Well, did you guys talk to him?
Detective: We did.
Lieutenant: And?
Detective: He ain't talking.
Lieutenant: Well, maybe you should head on over to his place, and try to get him to talk. Twist his coil a bit, if you know what I mean.
Detective: Sure thing, boss. I get you. We'll do what we gotta do.

Needless to say, I still wasn't having any luck with this thing. Things finally hit rock bottom when I bought a Slinky, and it got twisted inside the box, and I couldn't even get it out of the box. This was the last straw. I tossed the Slinky, box and all, into the garbage, and swore off that toy forever.

So, is T-Jack destined to become a modern-day version of the Slinky? I'm not sure, but things don't look too promising right now.

Looks like we're headed for a loooooong Fall.

However, hope springs eternal. I'm off to EBay, where I'm sure I'll be able to find a reasonably-priced Slinky. Maybe my kids can make it work.

You Know What, I Think I Will Have Fries With That

Monday is shaping up as a very exciting day in the markets, albeit probably not a very positive one. It depends upon how things shake out over the next few hours. Lehman Brothers is still trying to sell itself, and with word that Barclays Bank has walked away from the bidding, it appears as though Lehman might not have any suitors. A bankruptcy filing is possible. Meanwhile, The Wall Street Journal is reporting that Merrill Lynch has just reached a deal to sell itself to Bank of America, for approximately $29.00 per share. While that's a solid premium over Merrill's Friday closing price of $17.05 per share, it's still a far cry from the stock's 52-week high of over $78.00.

I find it interesting that on several occasions since the current economic crisis began bubbling up in the summer of 2007, many people have felt that the worst was behind us, and that we had hit bottom...only to see the crisis deepen. Why have we all had such a hard time seeing the real depth of the problems here? Did we blindly ignore all of the continued warning signs? Are we just too optimistic by nature?

Actually, I think that there's a completely different answer. The financial media. Specifically, their choice of a moniker to describe the economic issues we were facing:

The Credit Crunch.

Therein lies the problem. Sure "credit crunch" has a nice, alliterative ring to it. But, it's a less-than-threatening name for a crisis. "Credit crunch" sounds like something an upscale restaurant would use as a coating on pan-seared Atlantic salmon. Better still, it reminds me of that magical crunch topping they serve at Carvel. That crunchy, chocolaty stuff they use in their ice cream cakes to separate the vanilla and chocolate ice cream layers. The lifeblood of Cookie Puss and Fudgie the Whale.

Now, I like to think of myself as a relatively sophisticated market observer. Yet, even I got caught up in this ridiculous name. Whenever I'd hear anyone discussing the credit crunch, all I could think of was "Mmmmmm, credit crunch...." I instantly became hungry, and had a hard time taking the whole situation seriously.

That got me wondering, perhaps this was done intentionally. I remember reading back around 1983 that the Soviet propaganda machine claimed that Michael Jackson was actually a U.S. government agent, whose job was to entertain the American public, keeping their minds off the crumbling U.S. economy and our doomed political system. This was back when about one in four households in this country owned his "Thriller" album. And, that doesn't count those who chose to simply copy someone else's copy of the album. Of course, it's not that I know anyone who actually did such a thing. After all, that would be a violation of copyright law. I'm just saying that it's possible.

So, maybe this "Credit crunch" name was our government's idea, to get us to underestimate the severity of the current economic crisis, and to keep us from panicking. Perhaps in 20 years from now, I'll go into Carvel, order some crunch topping and say, "Hey, I remember when this stuff used to be really good, but now it's just weird. And didn't it used to be chocolate-colored?"

Whatever the case, here's a message for our friends in the financial press. Next time you see a crisis brewing, try to come up with a scarier name for it.

In the meantime, I'll have a large order of chicken fingers with credit crunch topping, please. Oh, and make sure to throw in plenty of that economic malaise dipping sauce.

I think we'd cure the World's ills if everyone would just read this blog!

I spent a weekend in Chicago recently, and had the opportunity to have some conversations with some girls ( women, really)from Brooklyn. It started off regular enough. We started talking about various ills in society, and I had an inkling that I was barking up the wrong tree, but I plowed ahead with my thoughts anyway. You know, how it doesn't matter if the Kipling bag is $40 instead of $80, the idea is it's a Kipling bag. Why's that bad? Well the way I see it is like this; every class has The Jappies, The Wannabes, The Normals, and The Can't Haves. The Jappies have every brand name: Juicy, Kipling, Burberry, etc. The Wannabes get it too. Then, slowly as the price drops some Normals start to succumb to the pleading of their kids and they get it too. However, I believe that the Normals, those people who others look at happily knowing that they are willing and able to stem the tide of rising Jappiness and materialism, have a responsibility NOT to succumb. I feel these things should NOT be normalized because those few Can't Haves, really can't have it, and there have to be some "Normals" who don't make them feel so left out. They also have to show the Jappies and the Wannabes that not EVERYONE cares about these things. That it's OK to afford things and not get them. So that did not go over so well. I was told that the self esteem of the child was at stake (I didn't say it, but I believe that if the parents wouldn't be so into it the kids would not tie that much of their self worth to it), and also, isn't hypocritical to say no to your kids, if you get it for yourself. So, I said, no. Because if a kid wants a belt that costs 100 bucks, and his father wants it to, that father worked to make that money, understands where it comes from and what it took to get it. When you present a 15 year old boy with a $100 belt I don't think it means quite the same thing. Again, I believe that the importance that's placed on these things by the parents definitely influences the kids.

Well, once the self esteem can of worms was opened there we were. Staring at the gaping abyss one falls down when peering over the edge of children's "happiness." I said something I heard from a therapist friend of mine, which is: we don't need to make our kids happy, we need to give them the tools to make themselves happy.

To me, that means not getting hysterical when your kid comes up with a situation that is tough on him. It means not letting your kid see you make this the be- all and end- all, die on your sword situation. It means not driving your kid to school at 7:30, when it starts at 8:30 to make sure he gets the BEST seat (one of them said she does that on the first day).

I was told no, kids will be disappointed by the world so we need to make sure not to disappoint. I said I believe that disappointment and adversity in a loving environment helps prepare kids for dealing with these things (y'know, real life) more easily. You can't make your kids happy all the time. It's just not possible. You can't make small things into big things (like "ugh the uniform is SOOOOO uncomfortable..." hey, let the kid decide), you can't harp on things, sometimes, as parents, we need to step back. We need to let kids come to us, as much as we are bursting to know what happened after that LOOOOOOOOONG discussion the night before, the kid needs to know that we think they've internalized it, that we had the discussion already and they'll let us know. When we bombard them when they walk in with QUESTIONS! about the topic it just signals them that this is a navel gazing issue that won't go away.

Granted these are all generalities, but parents need to be smarter. Advocate for their kids when needed, let their kids know they have their backs, but not smother them by 'making them happy."

I don't think I did much to convince them of my position, but at least in this instance I feel strongly that I'm right.

And that's the thing. The hardest thing really. Anything can be rationalized. A principle is just a theory until you're tested. But that's a blog for another day.

FBB

Can Anyone Lend Me About $2.6 Billion For A Couple of Weeks?

It just seems as though the weekend can't come too soon for the folks over at Lehman Brothers.
The stock continues to fall, and with a few trading hours still to go, the shares are down about 77% this week.
The Wall Street Journal and others are reporting that CEO Richard Fuld is shopping Lehman to just about anyone who will take his calls, including the firm's major rivals.
I haven't yet been able to substantiate the rumor that Fuld went down the block from Lehman's headquarters in Times Square, and tried to convince the Naked Cowboy to take a stake in the firm.

I am somewhat dismayed by all of the news stories that simply list all of the potential suitors for Lehman, including only the usual suspects, like investment houses, banks, and some large private equity firms. At times like these, I think that it's critical to think "outside the box," and come up with creative solutions.

Currently, Lehman's total market capitalization (current stock price multiplied by the number of shares outstanding) is approximately $2.6 billion. Nowadays, there's a phrase to describe that: "bite-size."

By comparison, the following companies now have larger market caps than Lehman:

Game Stop $6.8B
Abercrombie & Fitch $4.3B
Family Dollar Stores $3.8B
Petsmart $3.4B
Foot Locker $2.7B

The point is, almost anyone can buy this thing now. Allow me to toss out a few suggestions:

(1) Microsoft. Because they can. Probably out of the petty cash drawer.
(2) Berkshire Hathaway (Warren Buffett). This would be classic Buffett. Years ago, he stepped in to rescue Salomon Brothers. He could do the same thing for another venerable investment house now.
(3) The U.S. Government. No, I'm not advocating some sort of a bailout, a la Fannie Mae/Freddie Mac. This recommendation has nothing to do with the Fed or Treasury. Instead, I think that the Department of Defense can buy Lehman, and put their global army of bankers to work tracking down Osama bin Laden. I've worked with Lehman bankers in the past. These guys are very persistent and enthusiastic. They will eventually find bin Laden...and offer him a mortgage, no questions asked.
(4) The New York Yankees. What would be more appropriate than to have one New York institution buy another? Lehman could fit right into the current Yankee culture. Their employees would continue to be paid oodles of money, and wouldn't even have to show up for work all of the time. When they did show up, they'd simply go through their business in a generally uninspired fashion, and not actually, you know, win anything. Then, they can stand around talking about their great, 100+ year winning tradition, even though they haven't accomplished much of anything since the millenium was in its infancy. Heck, in a few years, if they got bored of their building, we'd just build them a new one. Don't worry, the City will pay for most of it.
(5) The people who own the convenience store down the block from my office. $2.50 for a 20 ounce bottle of barely-above-room-temperature Diet Coke?! $1.00 for a medium-sized banana?! $1.00 for a package of 4 (used to be 5. Why don't they say, "New, smaller size!" on the label?) Sunkist fruit gems (no trace of fruit or gems in the package)?! Are you people kidding me? Clearly, these guys have more than enough stash to make this transaction happen. Here's what you do, Chung Li. Mark up your fine selection of "Classic" (i.e. expired three months ago), 4oz. yogurts from $2.75 to $3.00, and you're there.
(6) Me. That's right. Yours truly. Of course, I'd have to borrow about $2,599,999,000 to make this happen, but I'm sure that's do-able. I'm not sure that I'd be able to turn this thing around, but clearly, the people who run the place now don't seem to have the answers. Besides, they've got a really neat headquarters building in Manhattan.

Now, I'm sure that my offer would be met with quite a bit of skepticism, but I want to reassure everyone that I represent a very viable option. First of all, just to show my commitment to the deal, I'd be willing to put up about $1,000 of my own money. You heard that right. I'm not going the fully non-recourse route on you people here, like all of the other guys will. To put it in the Wall Street lingo that these guys can understand, "MBB's going to have some skin in the game." Secondly, I'd make sure to consider the tax implications of any deal. After all, I've got extensive experience in structuring tax-efficient transactions ("Just make the check out to 'cash,' and we'll call it even").

Finally, look at it this way: Anyone can sell (give away) his investment bank to another bank. Only a true visionary can devise - and execute - a solution like the ones I've outlined above. Doing so at a time of utter chaos? Now that's what we call "greatness."

Your move, Mr. Fuld. I can be reached via the comments section of this blog.
Just ask for MBB. They'll know who you're talking about.