This article conjures up the following scene in my mind.
Paulson: Jamie, my old friend, please let me do this service for you, in the gift of many banks and branches.
Jamie Dimon: Bless you, godfather!
Paulson: now, Jamie, a time may come when i ask a service of you, a favor, in return.
Jamie: anything, godfather! Whatever you ask…
Seriously, though, it looks as though we’re going to see a big thaw in libor. it is certainly no accident that this story appears in the WSJ. The Godfather doesn’t want his good works to be hid under a bushel basket.
We should shortly see long rates start to fall. Paulson et al. want desperately to have cheap mortgage money, the better to soak up all the excess housing units, which really probably ought to be razed. Check out rates on solid munis, you can easily get long yields in the high 5s, but this is highly temporary. Do you have the guts to buy them? I don’t. The inflation monster is scaring me half to death.
Ok, I’m off in ten minutes to gallivant with the Houston diplomatic corps, but I have to deliver a brief eulogy for Bear Stearns.
Bear Stearns died today. Helicopter Ben called up Jamie Dimon today and told him the printing presses were red hot, and he had an entire train loaded with greenbacks, and Ben asked Jamie politely if would accept several billion dollars in return for the favor of propping up the corpse for a while.
All deaths are sad, tragic, and scary, but this one is really the stuff of nightmares. When I worked on Wall Street, Bear Stearns was still Ace Greenberg’s company. Ace expected his employees to reuse rubber bands and paper clips. If a trader at Bear hit a home run, he could expect to be fired. “You might have struck out, you dumb fuck, why in goddamn hell didn’t you lay down the bunt like I told you???!!!!”
Well, goodie for Helicopter Ben. He’s got all the troops out tonight bracing themselves against all the dominos that are teetering in sympathy with Bear. I guess that’s good, but I wonder how Ben sleeps at night?
What is Trichet going to do when the first eurozone bank goes down? Will he unlock even a single centime to bail them out? Well, if he does, you know for sure that someone is holding a gun to his head.