Friday, March 21, 2008

Happy Easter, Peeps!

A coworker of mine sent this and it's too hilarious not to post. Don't you love the stripper peeps? One's doing a pole dance and a few have money in their g-strings. How about the one with a boob cover cum Janet Jackson-esquewaldrobe malfunction and no bottoms? The best has to be the fat yellow peeps presumably paying to watch all this.

Thursday, March 20, 2008

Another Bear Stearns Employee Interview

SG, another male Bear Stearns employee speaks to me. This time the interview is on-site!

Me: How long have you been working here?
SG: 1.5 years.
Me: What do you do for Bear Stearns?
SG: I'm a prop trader.
Me: Are people really working right now?
SG: Yes. The motivation is less to work really hard, but after the compensation announcement last night I'm feeling better.
Me: What are you doing?
SG: I'm a prop trader so I can continue to work on my skills and try to do different things [with the market], regardless of where I work.
Me: Who isn't working then?
SG: The sales guys. Their asset is the phone book so they don't need to be looking at the market like me. They won't do their work until they know where they'll land.
Me: Is it true that once your stock is vested, you don't have access to sell it?
SG: That's what I heard and it's not the case where I used to work. I think it's not the case anywhere.
Me: It's messed up.
SG: Well it does vest in the normal schedule you just can't sell it.
Me: Same difference to me. If you can't sell it then you don't have it. Look what happened to the BS stock. Probably lots of people who had vested shares that couldn't sell that are totally screwed right now.
Me: What brought Bear Stearns down?
SG: It's a classic run on the bank.
Me: But why Bear?
SG: Well only broker-dealers can be targeted since the commercial banks [like JPM] have access to the discount window. Easier to pick on Bear than the other broker dealers. Goldman is sitting on a mound of cash, Lehman had a credit line and collateral. All Bear had was $17bn of collateral. And now we know Bear had $30bn in sub-prime assets.
Me: Change in subject. Do you agree with JS, another Bear employee that it's better to use a hooker than to have an affair?
SG: Absolutely. Less messier.
Me: Spitzer used the same girl on a number of occasions. What do you think of that?
SG: You can't use the same girl, I'd use a different one every time.
Me: JS says the relationship is clear so you can use the same girl if you want.
SG: The relationship is clear to the girl but not to you.
Me: I agree, you can't have the same poon tang over and over. Maybe something is drawing you to the same girl.
SG: What's poon tang?!
At this point, another employee next to me starts chortling and turns pink, the color of his shirt.
Me: What do you think about our new governor, Paterson, he's blind and had an affair.
SG: I was talking to my wife about this...she was in disbelief about how a blind guy can get involved in an affair. It's power. But [because of his blindness], who knows the quality of the affair. Also he's legally blind, which means he can still see.
Me: Would you pay $4300 an hour for a hooker? That's the rumored price of Spitzer's.
SG: No, not for a no-name, not worth it. Definitely for Julia Roberts. Then you can call up all your friends and brag that you bagged Julia Roberts.
Me: You can also be unscrupulous and videotape your encounter and try to hawk it.
The other male BS employee next to me chimes in, "Yeah I'd only pay that much if I could use it as blackmail."

Wednesday, March 19, 2008

Bear Stearns employee interview Part Deux

Background: JS, 35 year old male Bear Stearns employee trading equity derivatives speaks to me.

Me: It's Wednesday a few days after it was announced that BS will be sold to JPM for $2 a share. What are you doing at work?
JS: It's a funny situation because I'm in trading. For example, right after giving notice of quitting, a trader wouldn't be allowed to trade. I feel like there's no benefit to making money and no repercussions for screwing up. I used to trade with a conscience as if it were my own money and felt I had a stake in it but now it feels like trading someone else's money. It's a weird feeling. I still do the right thing but I could imagine cases of abuse.
Me: Are you actually working? I'd probably be gossiping with my co-workers if I were in your situation.
JS: Yes, I am [working]. But there's a lot of web surfing.
Me: Does Bear Stearns block porn?
JS: Yes, but you can still get some pretty good soft stuff.
Me: Tell me the latest internal news.
JS: We're waiting to hear tomorrow on a short term retention package for the next 3 months.
Me: Have people been laid off yet?
JS: No.
Me: Have there been a lot of quittings?
JS: More than I've seen before.
Me: I'm going to change the topic. What do you think about Eliot Spitzer and the whole prostution thing?
JS: I can't believe how expensive it was and that there has to be a cheaper way.
Me: I meant do you think it's right or wrong? Should he have lost his job over it?
JS: He has to lose his job because it's not good behavior for a public official. I don't personally hold anything against him besides losing respect because he got caught.
Me: How is common is using prostitutes?
JS: I just don't know.
Me: Do you know anyone who's used one?
JS: Not to my knowledge.
Me: What do you think about the new governor, Paterson? He came out in the news about having extra-marital affairs.
JS: I think hookers are better than affairs especially when you have a family.
Me: I'm going to kill you either way if you do, but what is your logic?
JS: A hooker presumably doesn't have emotional attachment, but in an affair it comes to question if you love that person or not. Where do your loyalties lie might be in question. An affair can pull apart a marriage. Hookers can pull apart a marriage too but only if the wife gets mad.
Me: Why wouldn't the wife get mad over a hooker?!
JS: (long pause) I can't think of a reason why she wouldn't get mad. But in the affair she'd probably get more mad. With hookers you generally don't leave your wife for one but you might with an affair.
Me: Let me set the record straight and just say that they're both bad. I don't think it's a good idea to have a moral hierarchy to condone one behavior over the other.
Back to BS: Are people really working?
JS: Yes, but people are unabashed about working on their resumes, talking to headhunters or going on interviews.
Me: What are you doing?
JS: I have to maintain my trading positions. I still address customer orders.
Me: Are you getting the same amount of business as if this whole thing didn't happen?
JS: It's a lot less.
Me: Is it true that there are psychologists on site to counsel employees?
JS: There always are. There's also a hotline for people to call. They're sending out more reminders of these existing services.
Me: How do they word these reminders?
JS: I don't know, I mostly ignore them.
Me: Don't you want to use one for free?
JS: No, do you think they know more than me and you?
Me: Do you feel like employees are engaging in some kind of camraderie or kumbaya based on going through this tragedy together?
JS: No. It's more of a competitive situation. It's not like a sinking ship that we're all going down together. There are different options based on who you know, what your skills are, etc. So people are in different situations, which takes the camraderie out. It's far from hopeless.
Me: The rumor is that 5000 people or so who will lose their jobs, how will the economy absorb them? Will they find jobs?
JS: I think so. There are other options like the hedge fund industry. A lot of people will go to the buy side. People can move geographically too.
Me: Are going to miss your sweet Grand Central commute?
JS: Yes especially when it's raining.
Me: Anything interesting or juicy going on?
JS: I heard a story, I don't if it's true that Alan Schwartz got beat up in the gym. And that Jimmy Cayne has a full time body guard now.
Me: I found a 47 page merger agreement published on the Bear Stearns website. What do you think of it?
JS: I didn't know about it until you mentioned it and it was an interesting read. Employees probably don't know it's there.
Me: I'm surprised it wasn't circulated as an internal memo. Have there been any internal memos? What are they about?
JS: It's pretty lame.
Me: Are you not at liberty to discuss them?
JS: They're so unmemorable.
Me: And you have a steel trap memory...
JS: There's no integrity with management so I don't even want to read.

Tuesday, March 18, 2008

Invisible hand and iron fist

How does one sue the government or can you even sue the govt? I'm wondering about this question because obviously a lot of BS employees and stakeholders are pissed at the Fed.
And when you sue the govt what can you get? Govt officials can stand to lose only their jobs, I can't think of anything else. The plaintiffs don't stand to gain anything. I'm trying to think of situations where the US government has committed wrongs (maybe even sins!) and what the repercussions were. In the case of annexing Hawaii illegally -- nothing but a statement of apology. In the case of slavery, the myth of 42 acres and a mule.
I guess in times of trouble, like during the Great Depression, the government tends to take a very active role. A sure sign we're headed towards something of that nature given the events over the past few days...I guess we let everything run merrily along under laissez faire which created the crisis in housing/sub-prime/lending. Now the Feds have to step in. Adam Smith is rolling in his grave.

News from this morning's WSJ

Finally, the first meaty story on Bear Stearns! I can really sink my teeth into this one.
A couple of reactions:
1. Seems like the Fed took control of a supposed free capital markets, much to the detriment of Bear Stearns. They forced the sale of BS over the weekend.
2. JPM covets 383 Madison (the building)
3. Everybody loves Chinese food (this is what JPM ordered while conducting due diligence).
4. The Fed's decision to open the discount window for investment banks is a few days too late for Bear. :(

Here's a semi-interview/personal account from BS employees' perspectives.

Monday, March 17, 2008

Bear Stearns employee interview

Full disclosure: I got scored this interview by sleeping with the interviewee. Is this unethical?

Background: JS, 35 year old male Bear Stearns employee trading equity derivatives speaks to me.

Me: How long have you been working at BS?
JS: 8 months.
Me: How do you feel about the current situation?
JS: I feel that management let me down and the Fed also.
Me: How so?
JS: I think it was important for the Fed to open the discount window to investment banks, all at the same time. If they'd done that a week ago, it might have prevented Bear Stearns from collapsing. [As for management], I think it took management too long to recognize they had a problem.
Me: Can you elaborate?
JS: Even I noticed the problems. I noticed our funding costs going up. I noticed some unusual trading activity on the 30 and 35 strike puts when the stock was trading at $80.
Me: So why didn't you buy some of those puts so we'd have a lot of money for our retirement and our kids' college education funds if you suspected something going down?
JS: As employees, we're not allowed to buy or sell the stock.
Me: What do you think about the JPM deal?
JS: It seems like they arrived at a very discounted number and even some of what JPM said suggested that they think they bought it for cents on the dollar. I believe they expect to harvest much of that value.
Me: Is the culture of firm ownership true?
JS: I don't know if it's forced upon people with a 5 year vesting period or whether it's a natural respect for the company, but there is a very high percentage of employee ownership. There is some element of belief that to own the stock is to be loyal to the company. But I also heard that your shares don't vest for 5 years, if that's true, I am extremely unimpressed with the Bear Stearns stock plan. (Average is 1-3 years vesting period)
Me: What was it like going in to work Monday? What did you expect?
JS: It was actually business as usual day.
Me: C'mon...really...It didn't feel as pivotal or emotional as going in to work like after 9/11? Your company went bankrupt overnight...
JS: No.
Me: How much employee wealth do you think is wiped out?
JS: I calculated $250K per employee, but the billion dollar loss from one guy is throwing this statistic off.
Me: Do you feel bad for any of your co-workers?
JS: Yeah. Especially the ones with a lot of stock.

Me: Were there any disgruntled or emotional employees? Outbursts? Drama? Tears?
JS: There were a number of people in a delicate emotional state. No tears streaming down their faces, but they were close to crying.
Me: Are you worried about losing your job?
JS: Not really.
Me: Why not? Are you more worried about me spending money?
JS: Yeah.
JS actually just conked out and started snoring so this interview is over.

I can't bear it any more

I've been especially dissatisfied with the reporting of the Bear Stearns situation in the press:

1. I'm tired of BS referred to as a "venerable" or "storied" firm of Wall Street. Before any of this happened, BS was considered a second or third tier bank.
2. I'm sick of JPM portrayed as the rescuer or giving BS a "bailout", "harking" to a 100 year or whatever history of saving troubled firms. It's obvious to me that whatever actions taken by JPM are self-serving.
3. Nobody seems to know the terms of the deal except the $2 a share business that is often linked to annoying information like, "and only a few days ago the stock was trading at $65" or "in January 2007, a high of $171 a share". They also like to talk about how the building alone is worth over $1 billion so it seems like a "fire" sale. Maybe or maybe not? $2 a share is superficial information and it's being overblown in the stories -- great material for a comic but not enough for a meaty story. We still don't know how big were Bear's liabilities, what are the breakup fees, if any, are there executive golden parachutes, what will happen to the employees, how did JPM conduct due diligence, how/when did the Fed get involved, etc. etc.

What I really want to know are the full terms of the deal, how the parties arrived at them and the personal stories of Bear Stearns employees. All of this is lacking in the press. Believe me, I've tried -- I've read every possible article on the "fall" of the "venerable" "85 year old" Bear. They're all the same repetitive crap that reads like the Sweet Valley High series.

Need Journalism 101

What is the point of journalism or reporting? Is it supposed to tell the truth (and how is that possible?) or inform (and what's the point of that?) Most of what I read in the papers today seem tabloid-style, sensationalistic headline grabbing, superficial crap. The headlines on are especially abominable, as I'm sure they're written by drunken fraternity brothers on unpaid internships. I've totally boycotted this website. Now blogging, everyone knows upfront that it's personal and biased so I don't hold bloggers to the same standards of writing with those of WSJ, CNN, NY Times ilk, blah blah blah. Is blogging a kind of journalism?