Author Archives: JC

Redistribution Wall Street style

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Everyone knows by the now that Bear Stearns the venerable, bulge bracket, but not white shoe Wall Street firm basically went under earlier this week.

For those who prefer a more redistribution leaning economic system you love this story. When Wall Street goes into redistribution/zero sum mode its the best well oiled machine bar none. In fact there isnt a government on the entire planet that can redistribute cash and other assorted goodies faster, cleaner and more painfully than Wall Street. The Bear Stearns fiasco is a perfect example.

About two weeks ago Bear Stearns was worth around US$ 75 bucks a share giving the firm a market cap of around $8.5 billion. Monday morning this week the firm had been sold for US$2 valuing the firm at just over US$230 million. What happened in between? Lots of things but by the far the worst were, unfocused and inept senior management, a gutless board and old timers who should never have been allowed to hang around forever and keep interfering. Hello John Howard meet Ace Greenberg and Jimmy Cayne (the two previous CEOs who never left).

Heres a trader’s perspective of this tragic soap opera …
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The Government as a frugal fiscal manager

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From today’s Financial Review

You can tell when governments get long in the tooth: ministers keep recounting the good old days, when they first came to power. So it was last week when the leader of the government in the Senate, Senator Robert Hill, gave one of the reasons for the government’s sound economic record: “this government took hard decisions to cut back public expenditure.” Hill’s teeth must be near Walrus proportions because it has been a long time since the government’s first tight budgets. There has been no frugality in recent years.

We shall know more about the 2005-06 Budget when the Treasurer, Peter Costello, overcomes his embarrassment and releases the mid-year review which languishes in his Canberra office. But we already know that the Commonwealth has recently embarked on a spending spree the likes of which we have not seen outside of a recession.
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Counter-terrorism

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From the Australian Financial Review, 8th November, 2005

Thank goodness for the counter terrorism guards on Sydney’s Harbour Bridge: they can stop pedestrians who use the bicycle path to cross the harbour. However, some people ignore instructions and continue their stroll. If we learn from the UK, these jaywalkers may soon know the full force of Australia’s new anti-terrorism laws which provide for detention and control orders for people who have broken no laws.

Sally Cameron suffered under UK anti-terrorism laws when she walked on a bicycle path in the harbour area of Dundee in northern UK. According to the London Times, Cameron was arrested, charged and held for four hours for using a path designated for cycles but, for security reason, not for pedestrians. Cameron, who saw no signs prohibiting walkers, was apprehended after two police cars were sent to the crime scene. She was lucky to escape prosecution.

This followed the detention of 82 year old Walter Wolfgang who was ejected from the UK Labor conference: he protested against a speech made by the Foreign Secretary, Jack Straw. The BBC said Wolfgang’s security pass was taken from him and police detained him under the said anti-terrorism act when he tried to re-enter the Conference.

A third incident, reported in September by the UK Guardian, concerned the arrest, detention and charge, again under the UK anti-terrorism act, of David Mery, a 39 year old French citizen who wanted to catch a London train.
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