Fixers by Michael M. Thomas

Author:Michael M. Thomas [Thomas, Michael M.]
Language: eng
Format: epub
ISBN: 978-1-61219-499-8
Publisher: Melville House
Published: 2016-01-25T16:00:00+00:00

NOVEMBER 20, 2008

Six weeks ago Mankoff and the other bank CEOs trooped down to Washington and were given access to hundreds of billions of TARP and other bailout funding. The Street’s expectation was that this would calm the markets and send the averages soaring.

Well, someone didn’t get the memo, because this simply hasn’t happened. Quite the contrary. The last six weeks have turned out to be sheer market hell. The Dow closed yesterday off 427 points and followed that up today with another 445-point drop, leaving the average at 7,552. When I began this chronicle back in February 2007, the Dow was at 12,700 and change. That’s a 40 percent drop in eighteen months.

Bank credit is tighter than ever while the larger economy worsens. It’s a perfect storm of financial self-contradiction. Businesses and households are in deepening trouble, which reduces their creditworthiness, which intensifies the banks’ reluctance to lend. That’s the official excuse. From what I hear, though, Wall Street has other uses in mind for its bailout money, and they don’t include alleviating Joe Sixpack’s misery. One could make the point that if TARP had been fed into the larger economy to save jobs, keep plants and stores open, and forestall foreclosures, the stock market might not have tanked so badly. But who am I to opine? I’m not an economist or a trader.

Yesterday, STST traded at $52, a quarter of what it was selling for when I met Mankoff at Three Guys. Less than half of where it was when Mankoff and Gerrett cut their deal. Ouch! The only bright spot in the slump in the price of stocks is that it has somewhat stilled the chorus of complaint that the taxpayer got a lousy deal in TARP, since Wall Street hasn’t been spared. The financial stocks have taken a real beating, not only because business is terrible, but because the market figures the Street will be taken to the woodshed next year.

Mankoff views the carnage serenely. Neither he nor (he tells me) Gerrett is sweating STST’s current price. By next spring, he’s certain, once the new administration’s in power and pump-priming with all its might (and the taxpayers’ full faith and credit) and the market sees the kind of money STST is making, the shares will be back well over $100 and probably closer to $150. Let us note that everything he’s predicted so far has come to pass.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.