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$$$Because your Ken Lay Lives tighty-whities have seen better days: Lucy Gao boxers. [Cafe Press]
$$$Mecca, as you know it: The Money Shirt. (Settle down, spaz, there'll be no strokes on our watch). [Clay's Place]
$$$Manic-depressive, pessimist banking loser seeks petite 25-35 year old equally bitter, maladjusted borderline nymph for comiseration, "good" times. And we totally call dibs. (Don't even act like you're not just as turned on as we are by this, people). [Craigslist]
We're awash in photos of the summer classes of London banks. To the left you see Lucy Gao's fellow Citigroup interns, and after the jump we've got the Goldman 2006 summer class. No one, however, has seen fit to send us any group shots of summer interns from out home town of New York City. This is an injustice that will not be tolerated. Only you can set things right by emailing us your photos. (And have no fear-we protect the identity of our sources with even more tenacity than Robert effin Novak.)
Continue Reading After the boys (and girls) of summer have gone
Now you can have all your Lucy Gao in one spot. That's right. Someone's gone out and started a blog dedicated to our Lucy. It's mostly stuff you've seen around here before but if you're just joining us for the Gao story, you can catch up on things over there.
Or you can feast yourself on DealBreaker's own dedicated Lucy Gao archive.
Lucy Gao Blog [Blogspot]
Following in the footsteps of our little brother blog Above the Law, DealBreaker is embarking on a very, very important investigative assignment-we're out to find the hottest bond trader in America!
There was a time not long ago when bond traders ruled the roost. They were the BSDs. They spat caviar, munched cigars, and ate more for lunch than you ate in a week. You might not have actually wanted to be a bond trader but at least once a week you wanted to live like one. Well, we're bringing those days back.
So what qualifies as a hottie bond trader? To be honest, we're not sure. That's where you come in. We want to know what the modern day bond trader looks like. Are the bulge bracket bond boys still boasting belt breaking belly bulges? Or is the aesthetic slim and trim? We'll find out when you email us with your nominations for bond trader hotties.
To nominate a bond trader, here's what we need you to email us (subject line: Bond Trader Hottie):
(1) the nominee's name, title (e.g., vice president or director), and where they work;
(2) a decent-sized, reasonably high-quality, digital photograph of the nominee (ideally a face pic); and
(3) a testimonial, in which you sing the praises of your favorite hottie and explain why he or she deserves to be crowned America's hottest bond trader.
Well, you've got the ground rules. Time to get to work. Send us your nominations. The contest runs from this very moment until, uhm, whenever we decide that this thing has gone on for long enough.
Oh, and feel free to nominate yourself. And to everyone seeking the title of America's Hottest Bond Trader-Good Luck!
We hope nobody shows the folks all worked up about the alleged naked shorting conspiracy the Depository Trust and Clearing Corp's recent statement , which we came across over on Gary Weiss's blog. The anti-naked shorting Don Quixote's are endlessly entertaining-reading their bulletin boards makes us laugh the same way we laugh when we watch little kids trip over their shoe laces-and it would be a real loss to have them encounter such a decisive debunking of their world view.
More Baloney Debunking [Gary-Weiss.Com]
When we were in college, a competing student paper ran into trouble paying its bills. Our paper, which was notorious for its outlandishly reactionary viewpoint, offered to financially bail out the other if it would modify its editorial policy in certain ways, including supporting a ban on fractional reserve banking and the abolition of the Federal Reserve. These fond memories were brought back this afternoon when we read Peter Cohan's item speculating that the Fed may be playing politics with interest rates.
Many polls indicate that the Republican party is unpopular and that Democrats are therefore likely to make gains in November. How do interest rates figure into the election in November? With consumer credit card borrowing at near record levels of $2.2 trillion in June and 26.8% of mortgages in adjustable rates, each time the Fed raises rates, it puts the squeeze on millions of voters who are already paying close to $3 a gallon to drive to work.So if the Fed raises rates, it turns up the anger boil against the party in power. If the Fed can hold off raising rates until after the election, it will take away a bit of potential pain from voters who might be making up their mind about whether to keep incumbents in power. Meanwhile, the 7% increase in labor costs translates into more money in the pockets of these potential voters.
Leonore Annenberg: Philadelphia Int'l to Savannah Hilton Head Int'l on her Gulfstream V
(This actually getting a little you-can't-help-but-feel-bad-for-her-in-an- "old-man-can't-control-his-bodily-fluids-and-therefore-constantly-wets-the-bed-and-we're-there-to-witness-it" kind of way. This is like the billionth time Leo's been to Rich Old (Widow'd) Man central this summer, in (what we're thinking-- obviously accurately--is) a vain attempt to land husband #3. At this point, we're kind of just embarassed for her, but she's like so freaking old that the embarassment is wrapped up in this sort of guilt-type situation thing-- not good for business--, 'cause she's SO OLD and it's always sad when old people are pathetic. Unless of course numero tres is already in the bag and LA's just following him around as a makeshift caddy until his guy gets back from vacation, in which case we say a hearty mazel tov, to you, LeA.)
Denise Rich: Adirondack Regional to Detroit Metro Wayne County on her Learjet 60
(We're not exactly sure what's going on yet but we know there's something. Detroit is like Miami, Florida, kids-- you'd don't go there unless you're going to die. Unless you've got somesort of shifty eyed situation going on with former President Billy C. Then, you go to Detroit. We haven't had due cause to contact our honorary sorority sister Hillie, just yet, but just wait for it. We're on to you, D. Rich. Oh, we're on to you. Dead hookers of the grandest proportions indeed.)
This is going to sound mean so let's get right down to business. This morning when we linked to the New York Post's story about Donald Trump firing Carolyn Kepcher, we included an excerpt indicating her age was thirty-six.
And when we re-read it after a few more cups of coffee, we thought, "Woah. She's been Donald Trump's assistant forever. How young was she when she started? Could she really be only thirty-six?"
Well, maybe. Our Googling in depth research has uncovered a wikipedia article claiming she was born in 1968. Which would mean she first turned thirty-six in 2004, and has apparently been the same age ever since.
[Editor's Note: It has been suggested that we need an advice columnist for DealBreaker, so we went out an found one. Meet Brock Fantasia.]
Brock Fantasia is the only remaining person in the JPMorgan analyst class of 2002 to still work at JPMorgan, which is in no way testament to the work environment at JPMorgan. In fact, Brock likes to think of himself as the Highlander of his analyst class, wielding an indestructible claymore of corporate finance.
After "totally wrecking" (in his own words) the Analyst-to-Associate program in the M&A group, Brock was briefly moved to the Natural Resources group, due to increased deal flow in the M&A group. Brock graduated from the prestigious University of Pennsylvania Wharton with a degree in Finance and is working in investment banking until he can find a buy-side job. Brock has been interviewing for buy-side jobs throughout the past 3 years and has not been a "good fit" anywhere, despite his ever-burgeoning skill-set. [Editor's P.S.,- Some of this is true. But only some of it. Send your questions to : brock AT dealbreaker DOT com]
Hi, it's me, Brock here, with my advice for this week.
How many of you have been in this situation? You're the go-to guy on a project. You know this because your staffer told you that this project could go "live" at any moment, including weekends. This makes working Friday night fun, because you know that after the client sees that page of tombstones you prepared dating back from 1999, they might realize that they're dealing with an institution that has been the co-advisor on more $50-$100mm second lien loans to media companies in Europe than all but 4 other banks. Who do you think they'll sign up with? If you said the 4 other banks in front of us, you must not work here, because if you did you'd realize that you can't fight the JPMentum! (More after the jump...)
It was just about twelve years ago that we met Princess Tatiana Von Metternich. We had been having drinks with an old Irish drunk in a part of France that was more German than French and the topic of discussion was how to avoid having to do anything that might resemble working for a living. Our proposal was marrying a wealthy young woman who we had run into on the Spanish Mediterranean.
"She's an heiress?" Timothy asked.
"Yeah. Her grandfather invented a machine that makes extension cords or something?"
"Eh. Women who stand to inherit only money are no good. Heiress should be a dirty word. What you need, lad, is a woman from one of the old families."
Six days later we were at a party being introduced to Tatiana Von Metternich, who was then in her late seventies and completely stunning. It made us wish we had been young during her youth, and then made us thank God we weren't. Living your life knowing you had (at best) married the second best woman in the world would have been too painful.
Yesterday the Princess died. The world is a little less pretty and a little less magical today.
Princess Tatiana von Metternich [Telegraph]
As everyone knows, the most miserable people on any deal are not the analysts. They're not the interns. They're not even the people who bind and clip 1,289 ever-expanding pitchbooks that no one will read.
The most miserable people on any deal are the lawyers. (DealBreaker editor/ex-M&A lawyer John Carney will confirm.) And mostly because they're almost powerless. As the joke goes, an analyst at Morgan Stanley can get a partner at Cravath out of bed at 4 AM, but the reverse can't happen. So while the poor lawyers are sitting around waiting for the bankers to make decisions, we made something for them to read. A DealBreaker for lawyers, if you will.
Introducing... our new legal tabloid, AboveTheLaw.com. AboveTheLaw is written by David Lat, a former lawyer (natch) and most recently, editor at Wonkette.com and founder of Underneath Their Robes. (More on David's background in this New Yorker profile.)
We never really got the point of "The Apprentice." If you win you get to manage a golf course or some building? So, like, you get to be a super? The guy we call when our sink starts spewing Hell Mouth? Sounds great. Oh, wait. What's that? Good point. You also get to work for a total jerk. The sort of guy who fires his long time friends and companions? Sounds great. Uhm. Fuck that. We're firing ourselves.
Carolyn Kepcher, Donald Trump's co-star on "The Apprentice," has heard him say "You're fired!" for the last time - because this time he said it to her, sources told The Post.The icy, 36-year-old blonde - who was running the Trump National Golf Club in Briarcliff in Westchester and helping supervise the Trump National in Bedminster, N.J. - was let go earlier this week.
"She became a prima donna," said one insider. "Being on 'The Apprentice' went to her head. She was no longer focused on business. She was giving speeches for $25,000 and doing endorsements."
So it seems that our gift wasn't enough for Warren. Yesterday he decided to make an honest woman of long-time girl friend Astrid Menks. Of course, Warren didn't spring for a nice ceremony-the whole affair took 15 minutes, was held at his daughter's house and apparently no one was invited. Even worse-no honeymoon.
Well done, Astrid. You've just married the world's wealthiest cheapskate. Scrooge McDuck call your office.
Warren Buffett remarries - reports [Reuters]
Crime/Fraud/Legal/Investigations/Inquiries:
Greg Reyes pleads not guilty [backdating]
As it turns out, lawyers are never guilty of anything [legal]
NASD Hits American Funds With $5 Million Fine [legal]
YouTube gives whistleblower a forum [legal]
Novell begins internal options grant investigation [backdating]
Feds investigating trading in oil and gasoline markets [investigation]
Johnson & Johnson wins antitrust suit [legal]
Progress Software restating previous financial results because of errors in stock-based compensation [legal]
M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
Sears + Sears
Wilbur Ross' International Textile Group + Wilbur Ross' Safety Components International
Russian state bank picks up stake in Airbus parent
Glencore, the Swiss commodities trading group getting in on the Rusal-Sual aluminum merger
Viacom buying remaining shares of MTV Japan
Wal-Mart Japan's Aeon make eyes at Daiei from Marubeni
For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Metropolitan Life puts Stuyvesant Town and Peter Cooper Village on the auction block [Auction]AOL's German unit [For sale]
R.R. Donnelley & Sons deal in trouble? [Going private]
QLT says no to buy-out offer [Buyout?]
Two buyout firms team up to take Cheddar's [Sold]
Money Raising:
Playphone gets $9.1M$
Groxis takes $4M$
iTaggit tags $1.04M$
Tom Cruise gets first funding for film projects$$
Miscellaneous:
Warren Buffett gets married [Merger]
What happens if you mix Coke and Clorox [CEO]
SEC: No action against former Shell boss [Energy]
IPO market sucks so VCs rely on M&A [Venture capital]
Hedge fund gets porny [Hedge fund]
Private Equity in the valley [Private equity]
Private Equity investors acquire stake in Germany's Nordbank [Hedge fund]
The Children's Investment Fund demands a vote on Euronext merger [Hedge fund]
California Pact Would Place Cap On Emissions (WSJ)
Back in college, in a class on local politics, a professor once explained that as goes California, so goes the country. In other words, many state and local governments took their cues from California, when it came to passing and writing legislation. The state just has a knack for being ahead of the curve, when it comes to new laws. It's hard to say whether they should be proud of this or not, but either way, that's the reality. So, it's worth noting that the state has voluntarily and unilaterally decided to reduce its greenhouse gas emissions back to 1990 levels. There are certain to be all kinds of loopholes, and the goal seems unlikely to happen (or make much of a difference), but as California is one of the world's biggest economies, it's a big win for the Kyoto crowd. And should the California example prove ok (wait a few years for the studies showing much of an economic boon it's been. seriously, they'll come), it may inspire other governments to try something similar.
Judge calls for new trial in Vioxx case (AP)
When it comes to reporting on the Vioxx case, the media has a 24-hour memory. After Merck wins a case, experts praise the company's strategy of fighting each trial in court, on an individual basis. After Merck loses a case, they all question whether the strategy was a disastrous move, and whether Merck should have just offered a broad settlement. And so, it's only fitting, that the day after a judge issues a mixed ruling that the pundit should, well, find stuff to like and dislike in Merck's strategy. Such is the case today, as a judge has upheld a guilty verdict for the company, but rejected a jury's high compensation award.
Australia's Telstra buys 51 pct stake in China's SouFun (AFX)
Looking to tap into China's raging housing market, Australia's Telstra bought a website. No, it makes sense; the site is all about real estate. That's certainly one way to play into a housing market. Meanwhile, we're going to launch a blog dedicated solely to the sale of Stuyvesant Town. Certainly that's a big enough deal that it can support a derivative economy consisting of a few dedicated blogs. And Paul Kedrosky throws out some ideas about ways to play the housing burst, in the US. Sure you could go right into Robert Shiller's pet real estate futures, but those aren't available from E*Trade, so fat chance you're gonna do that. You could always short the homebuilders, but that's a pretty tired story. Besides, Barron's just announced that those were looking cheap. Kedrosky throws out the idea of shorting E.W. Scripps? Wha? Yup, the company is at a 5-year high, and owns HGTV, the DIY Network, and the Food Network, which are all derivative products of our house and home-obsessed culture. It's all about the housing derivatives.
Costco Cuts Quarterly Profit Forecast (NYT)
Cue ominous music. As everyone knows, Costco is the rich man's discount store. Did you think that title belonged to Target? Nope, that's the hipster's discount store; get it right. Costco is for the cost-conscious wealthy, which is why, from time to time, you'll find them selling fine art next to their oversized bags of Crispix. The company is now the latest retailer to put out disappointing quarterly numbers. And you have to credit them for an utter lack of excuses. They didn't cite weather, or any major event that disrupted the quarter. They simply said their customers cut back on big purchases, like furniture. Still, we appreciate the candor and all, but the market probably won't give them any extra points for it.
$$$ Going Private calls out the man behind the Macintosh VC Kawasaki for not knowing how to count [Signum sine tinnitu]
$$$ Some interesting one-liners from the Blog Maverick himself. And a shot from behind courtesy of your favorite PE professional [Wall Street Fighter]
$$$ A pompous American investment banker prompts a nasty response from across the Atlantic. We only wish we could find part one.
Going Private chides us for saying that the costs of compliance with Sarbanes Oxley should be expected to decrease over time. We didn't have any real data on this but figured that maintaining compliance should be easier than getting compliant. Not so, protests GP-the costs keep going up and the accountants keep getting wealthier. She even points to a Financial Times article which cites a study by Foley & Lardner.
And there's the rub. Because we also saw that study and many articles about it. And the ones we saw said the cost of compliance is going down. So which is it? We report our confusion, you decide.
Expensive Date [Going Private]
If Tom Cruise hasn't had much luck attracting hedge fund money, maybe it's because they've got their media portfolios filled up with porn. We'd heard that a couple of funds were making money with porn investing but news that a hedge fund actually wants to buy an provider of pay-per-view porn surprised us. Here's MarketWatch:
The worlds of pornography and hedge funds combined this month when activist-investment firm Steel Partners proposed a management buyout of New Frontier Media Inc., an adult-entertainment company.During a recent New Frontier board meeting, Steel Partners manager Warren Lichtenstein told directors he was interested in leading a management buyout of the company and was willing to pay a premium, according to a Tuesday regulatory filing.
So we wondered, just how hardcore is this New Frontier stuff. Well, here's what they are showing at 10 PM tonight: "Double Reamed And Creamed — Sandwiched between two hoses dealing out the luscious cream, these ladies have never felt so heavenly!" So, uhm, yeah. Pretty hardcore.
Steel Partners proposes New Frontier buyout [MarketWatch]
Despite what many in the business media seem to believe, Warren Buffett did not spring fully formed from the mind of Zeus. He too was born of woman and today the old guy celebrates his 76th birthday. As a gift to him, for the rest of the day we're not going to use phrases like "tax avoidance" or "hypocrisy" or even "going to hell."
Because we know those words make you think of Warren in a bad light.
Well that didn't take long. It's only been a few days since Lucy Gao's email went global, and already she's a t-shirt. There are more in the NYCBuzz store. Our favorite (pictured here) reads: "Lucy Gao kicked me out of the Ritz. (I arrived at 9.01 pm)"
Lucy Gao T-Shirts [Cafe Press]
We've got friends who argue that intellectual property protection in the US has gotten way out control-extended patents, lengthy copyrights, litigation without end. Most days we think the investment in innovation we get as a trade-off for these things make it worth it. Today isn't one of those days.
Today's big financial news comes straight from the Lone Star State, where financial powerhouse McGraw-Hill (NYSE: MHP - News) has sicced its legal eagles on ... an upstart coffeehouse, of all things. Last week, McGraw-Hill subsidiary Standard & Poor's (S&P) filed a lawsuit in federal court against "Standard & Pours Coffee & Stocks," a Dallas purveyor of java, free copies of The Wall Street Journal, and live CNBC video.In the suit, S&P alleges that Standard & Pours appropriated for itself a name just a bit too close to S&P's own, causing customers to mistake the Texas coffeehouse for a long-lost subsidiary of the real S&P (shades of the 1998 case of Federal Express (NYSE: FDX - News) v. Federal Espresso). For infringing on its trademark, S&P demands the maximum compensation permitted by the U.S. Trademark Act: three times Standard & Pours' profits, and three times any revenue S&P lost when customers sauntered into Standard & Pours, and accidentally bought a cup of coffee when what they really wanted was a credit report. (Doh!)
We have to admit that we are starting to develop something of a crush on Polly Courtney. We haven't read any of her book yet-there are five chapters available on her website-but we enjoyed her email lamenting Helen Green's £800,000 win against Deutsche Bank. She's not hard on the eyes. She's smart-engineering at Cambridge and at least a couple of years at Merrill Lynch. And now the Daily Mail reports that our girl enjoys a little, uhm, pole dancing every now and then. She denies doing it professionally, of course. But she certainly seems to have the whole gravity defying, inverted thigh lock thing down.
So that might explain why we were annoyed by the tone and headline of the Daily Mail's article. Oh my, she complained of sexism and she's a bit of a party gal! Is this supposed to be hypocrisy? Is the theory that you can't really be bothered by sexism at work if you've swung yourself around a stripper pole a couple of times? We call bullshit on that line of reasoning.
City woman who quit over sexism admits pole dancing [Daily Mail]
Meanwhile, the Creative Bastard blog introduces us to the best solution to telemarketing we've ever encountered. It's a looping audio track of a potential customer sounding very interested in the proposal. Almost makes us want to take ourselves off the Do Not Call list just so we can play this game too.
Free Phone! [Creative Bastard via Consumerist]
A post this morning on LongorShortCapital reminds us this morning of the best interview question we've ever heard. A friend of ours who managed a trading operation at a then-up-and-coming and now big time investment bank used to ask it regularly to kids who came through his door looking to get a start on Wall Street. It works the same way the annoying questions-how many pay phones in the US? Why are manhole covers round-work but it's a lot more fun. The point, obviously, is to see how you deal with a difficult situation and how you reason your way through the problem.
The question: "Bear versus shark. Who wins the fight?"
Feel free to leave your answer in the comments.
Bloomberg today profiles Al Gordon, 105, one of the few people still lingering around Wall Street who actually worked on the street during the crash of 1929.
One of our favorite parts of the dialogue is a description of Gordon's investment strategy.
"Despite the fact that he's an old man, he buys things not for a quick trade," Byrnes says. "Al is a long-term investor, if you can believe that someone who's 105 years old can be a long-term investor."
As Dan Gross points out, Time Warner seems pretty uninterested in making major investments or innovations in its magazine business. Maybe its planning on selling it off. Who would buy? Oh, we don't know. Maybe the folks who just hired Time Inc's editor-in-chief?
And here's a leading indicator. The Carlyle Group, the huge private-equity firm that constantly scours the marketplace for multibillion-dollar deals, last month added a new senior adviser to its media and telecommunications team: Norman Pearlstine, the former editor-in-chief of Time Inc. Pearlstine's new job? He's supposed to tell Carlyle which huge media companies it should buy.
Crime/Fraud/Legal/Investigations/Inquiries:
Korean investigation into Lone Star Funds may delay sale of Kookmin Bank [legal]
Google chief executive joins Apple board [legal]
Home Depot adopts majority election for all directors [legal]
YouTube gives whistleblower a forum [legal]
Novell begins internal options grant investigation [backdating]
Feds investigating trading in oil and gasoline markets [investigation]
Johnson & Johnson wins antitrust suit [legal]
Progress Software restating previous financial results because of errors in stock-based compensation [legal]
M&A: [? = not yet closed, problems with the deal, lingering questions, etc.]
That big exchange mergers may be heading for trouble heading for trouble
Fosters pleads ignorance of takeover proposals
Russian state bank picks up stake in Airbus parent
Glencore, the Swiss commodities trading group getting in on the Rusal-Sual aluminum merger
Viacom buying remaining shares of MTV Japan
Wal-Mart Japan's Aeon make eyes at Daiei from Marubeni
For Sale/ LBOs/ Going Private/ Auctions/ Offerings:
Metropolitan Life puts Stuyvesant Town and Peter Cooper Village on the auction block [Auction]AOL's German unit [For sale]
R.R. Donnelley & Sons deal in trouble? [Going private]
QLT says no to buy-out offer [Buyout?]
Two buyout firms team up to take Cheddar's [Sold]
Money Raising:
Playphone gets $9.1M$
Groxis takes $4M$
iTaggit tags $1.04M$
Tom Cruise gets first funding for film projects$$
Miscellaneous:
CBS's Les Moonves and Viacom chief Tom Freston readying for fight [In-fighting]
LIPO Debate [Private Equity]
Energy deals keep on keeping on despite lower oil prices [Energy]
Mergers still main exit strategy for Private Equity [Private Equity]
European buyouts surge while UK deals decline [Buy outs]
A Forecast for a Fork in the Road (NYT)
The Economic Cycle Research Institute has had a knack for calling tops in the business cycle, and accurately forecasting recessions. It saw the slump coming in the early 2000s, and the methodology it uses anticipated similar activity in the 80s and 90s recessions. At this point, the economy is at a proverbial fork, or crossroads, and the institute says there's a 50-50 chance of a recession in the next year. Meanwhile, with the economy at a fork, the Fed finds itself fractured. The minutes to its last meeting reveal broad dissent over the direction of the economy. It's too bad there has to be just one answer. Perhaps the optimists could just go their way, and the pessimists the other, and both deal with the consequences.
Google CEO Schmidt joins board of Apple (San Jose Mercury News)
The tech press is in a hot lather over news that Google chief Eric Schmidt has joined the board of Apple Computers. Some are speculating on what the move means. Will the two companies form some sort of grand alliance to take on Microsoft? Will Google buy out Apple? Will everyone please shut up? Thank you. Nobody has any idea what it means. CEOs are always on the board of other companies, and it rarely signals any sort of meaningful alliance. In fact, were the two companies going to link up in some way, it's unlikely that they'd telegraph it like this. Hey, did you know that Al Gore is on Apple's board, too? Maybe he'll make the MacBookPro the official computer of the federal government after he's elected President. Of course, if you watched the West Wing, you'd know that a Democratic administration means Macs in the White House.
'Small-Marts' take on Wal-Mart (Fortune)
This is the type of article that we'd typically make fun of, but we're in a charitable mood this morning, so a different tack is to be taken. Various groups, which for some reason Fortune dubs 'Small-Marts" are increasingly girding up to do battle against the Bentonville behemoth. The small-marts include local farming groups, which raise the typical hay about supporting the local economy, and eating in a sustainable manner. Now, buying local is a sham idea, along with buying USA. And sustainability is a total red herring. Those opposing Wal-Mart point out that with energy costs so high, it doesn't make sense to ship food from across the globe. We've heard this argument before, and it's flawed. If shipping around the globe were so inefficient it wouldn't be cheaper. If eating locally were more efficient, it would be cheaper. That being said, if local, small farmers and retailers want to compete with Wal-Mart, they should do so on the basis of offering some superior combination of price and quality. Depending on rhetoric and politics to sell a potato is a sure loser when it comes to buying and selling.
Pocket of Pain for Young Graduates (BusinessWeek)
Paging Anya Kamenetz! Here's something you can write up for your Generation Debt column, or whatever it is you're doing for the Times these days. Or you can just include it in the next edition of your book. Either way, the average wages of recent college grads is slumping again. Turns out that having just a B.A. isn't so lucrative, and maybe it's because of some grand conspiracy to suppress the earnings of young people. Maybe it's because young people don't vote, so politicians pass policies that hurt their ability to earn. Or maybe it's because more and more people are going into stuff like studying art or social work. Perhaps it's because as the economy evolves, having the same degree isn't as valuable as it was, and now people are expected to get more training. And then of course, there's the fact that there' a lot of people going to college these days, which probably means a dilution of the quality of the average college graduate. Not to mention the fact that it's just not that special to have a B.A. Just throwing some ideas out there for you.
$$$ More fall out from Lucy Gao and her highly (self) anticipated birthday bash. You started to feel bad for her, but then--no, wait, you never did [Leveraged Sell Out]
$$$ The scientific method for whatever ailes you--such the difficulties posed to some in quantifying their gay-straight ratios [Craigslist]
$$$ Tips on cleaning up for all you blue shirts [Bankers Ball]
Uhm. Wow. It seems that Malcolm Gladwell really, really didn't like the response to his latest New Yorker article from Jane Galt (who, in the interest of full disclosure, we'll now take the time to admit having met socially on more than one occasion; and further, we'll admit we found her rather fetching each time-although she has graciously pretended not to notice our attentions). He's penned blogged a (over)heated response to her.
[More on Galt versus Gladwell after the jump]
Two emails purportedly from Citigroup intern Lucy Gao have emerged in the aftermath of the world-wide forwarding of her borderline obsessive-compulsive invitation to a birthday party at the Ritz. The first is a thank you to her guests. The second is an attempt to explain her invitation-she claims it was a joke but this could just be spin control.
Please note, we cannot vouch for the authenticity of these emails, although HereIsTheCity is convinced that at least the second one is for real.
Both letters after the jump.
[And, please note, if you have an email from Lucy, please forward it our way. Contributions will be kept strictly anonymous. Tips(at)DealBreaker(dot)com. Thanks!]
Continue Reading Obsessive Party Girl Lucy Gao Keeps On Emailing
Good finance fiction is apparently very difficult to produce. Otherwise there'd be more of it. We've got a couple of books by Tom Wolfe, some of Scott Fitzgerald's stuff and, well, that's about it. So we were thrilled when we caught wind of Golden Handcuffs, a new novel due out in a couple of months from a twenty-something refugee from an investment bank in London.
But there was something odd about the story. To begin with, we'd never heard of Polly Courtney until earlier today when DealBook took notice of an item on HereIsTheCity, which was itself pointing to an article published in the English newspaper The Observer. Any trail that leads through two blogs and an English newspaper deserves at least a bit of skepticism.
What's more, none of the folks involved mentioned a publisher. If you are an author for a major publishing house, one of the things you learn rather quickly is that it is a good idea to mention your publisher when discussing your book. You know, because it's a good idea to tell booksellers where to order your book. And, well, the publishers like it and they're the ones paying you to write.
So we did some digging. WallStFolly had discovered Miss Polly's website-where, by the way, she castigates Helen Green's £800,000 win against Deutsche Bank-and so we looked for information on the publisher there. It seems her book is being published by Troubador, which describes itself as "the leading Italian Studies publisher in the UK and publish an expanding academic research journals programme." That's odd. Why would they publish a roman a clef about working in finance?
The answer may be contained in the next sentence of Troubador self-description: "We also run a self-publishing programme for authors of any subject under our Matador imprint." So is Miss Polly's book being self-published? There's nothing wrong with self-publishing but we find it extraordinary that a roman a clef about a young girl in finance couldn't find a mainstream publisher. A young girl lost amidst the sharks of The City? We cannot imagine publishers wouldn't be climbing over each other for it.
But they aren't. This suggests three possibilities. One, Miss Polly's book is very, very bad indeed. Two, there is some grand conspiracy in London with publishers suppressing possibly embarrassing books about their financial institutions. Or, three, Miss Polly is just an enthusiast for self-publishing and wanted to go it alone.
John Travolta: Bangor Int'l to Hamilton Airport on his Boeing 707-100
(Bangor seemed like an odd pick for John to us, too. But when Hubbard says go, you go. No questions, no prescription drugs.)
Jeff Epstein: McCormick County(SC) to Anderson Regional (SC) (third time this month)
(ID'ing potentially nubile, willing young girls take time, people. It takes time. Palm Beach is done, over, finito. Anderson, SC means a brand new city with new faces, a new set of rules, and a new set of towels to pick out. You didn't think Eps was going to do all that on foot, did you? Time is of the essence, people. You're going to turn around and those girls are going to be sixteen. [Editors note: Are we sure this is our Jeffrey Epstein's plane and not the other guy, who is not accused of anything? Planespotter: Of course not!]
Larry Ellison: Olbia Costa Smerald to San Francisco Int'l on his Bombardier Global Express
(How's that $1.6 mm security detail working out for ya there, Lar?)
Well, we guess it's nice that the SEC is considering today letting Senate investigators interview SEC staffers about the allegations that it fired an investigator looking into insider trading allegations at Pequot Capital when his probe started towards Wall Street's highest echelons. All along we've thought that everyone involved wasn't treating these allegations seriously enough-the Senate committee charged with overseeing the SEC seemed to take a pass, the SEC barely even shrugged it off and most media outlets haven't paid enough attention to the story. Especially after the Senate judiciary committee finally brought in the fired SEC investigator, Gary Aguirre, and the allegations were made under oath and penalty of perjury, the charges deserved better than the treatment they initially received.
A few weeks ago, Senators finally started paying real attention to the charges but the SEC stalled, saying it needed the full commission to vote on whether the Senate could look into the charges. If the SEC does anything but vote to fully comply with a Senate investigation, it will be time for the President to become involved. Perhaps the Justice Department needs to appoint a special prosecutor. You wouldn't think that these were the kind of charges the SEC would want to investigate internally-not if it wants to retain any credibility. But then you don't work for the SEC.
SEC May Vote On Sharing Hedge Fund Probe Info With Sens [Dow Jones Newswire]
If only all conference calls could be this entertaining. Mike Masdea, the new Eminem, deserves a medal. Who knew Silicon Valley was the next 8 Mile?
Right click and and download the file here.
* Editor's note: Messages left with Masdea's assistant went unreturned so we cannot confirm that this is definitely Masdea on this recording. But circumstantial evidence (email forward trails) strongly suggests it.
All the terms for working too many hours in finance are violent. Getting slammed. Crushed. And, of course, killed. We always considered these to be metaphors but we were wrong. Very, very wrong. Those hours really are pushing up your blood-pressure and, very possibly, killing you, according to a recent study.
Long hours on the job may lead to a greater risk of high blood pressure, particularly for people who don't have much control over their work, a new study found."Other studies have focused on job stress, we focused on long work hours," said Dr. Dean Baker, director of the University of California, Irvine's Center for Occupational and Environmental Health, and lead author of the report in the September issue of Hypertension.
Baker said that focus was possible because the study relied on a mass of data from a 2001 survey of more than 55,000 California households. "It gave us the statistical power to control for lots of causes of high blood pressure," he said.
After accounting for many other causes of high blood pressure, the researchers said they found a significant association between working more hours and self-reported high blood pressure.
Why do otherwise smart and wealthy people continue to waste their own money running for office on self-funded campaigns? This year real-estate mogul Josh Rales spent nearly $5 million in a primary election for the Maryland Democratic US Senate nomination. Keep in mind there is very, very little chance the Democrats will take control of the Senate this year-so the best Rales can hope for is to win a position as a minority Senator. Even worse, however, is that he isn't expected to win the nomination.
Two years ago we saw Blair Hull pour $28.6 million dollars into a failed attempt to win the Democratic primary for an Illinois Senate seat, while former bond trader E.J. Pipkin sunk $1.6 million in an failed run against Barbara Mikulkski.
This clearly is not how smart money influences US politics. So how does smart money do it? The Rupert Murdoch way. When the Republicans took over the Congress 12 years ago, a group of neoconservative political operatives, journalists and policy wonks convinced him to pledge a few million dollars each year into the magazine we know as "The Weekly Standard." The magazine has been enormously influential, and has largely reshaped a republican party that was tending libertarian and anti-interventionist in the early and mid-nineties into the Party of Bush, enthusiastic for energetic government and hawkish on foreign policy. The US electorate may not be for sale but our intellectual class can be picked up for pennies on the dollar.
Cost of name recognition [Balitmore Sun]
One of the things we've heard Tim Carney, the author of The Big Ripoff: How Big Business and Big Government Steal Your Money and brother of DealBreaker's John Carney, argue is that market regulation can be viewed as a subsidy to certain publicly listed companies (and, of course, to investment banks).
Some companies may use tighter market regulation-think Sarbanes Oxley-to reduce their cost of capital by bolstering investor confidence. Of course, companies with better reputations among investors bear the cost of these regulations, as well, and find themselves competing in the capital markets for investor dollars against the companies enjoying the boost. So the regulations essentially transfer wealth from companies with better reputations to companies with worse reputations. What's more, the cost of enforcement is largely born by the taxpayers-another transfer of wealth to the companies who most benefit from the regulations.
Nowhere have we seen this better spelled out than in a Wall Street Journal op-ed piece that ran yesterday, in which the chief executive of a foreign company extolled the virtues of regulations on US exchanges precisely for the added credibility they bring companies. Our thought was, "Well, this makes a lot of sense if you are running a company whose creditability might otherwise be questionable. But that doesn't mean lawmakers are justified in imposing those costs on already creditable companies."
Today Going Private raises the possibility that this reputation bolstering effect of increased regulation might create opportunities for private equity. At first, the creditability gains for companies entering US exchanges might outweigh the costs of regulation. But as time passes and they've had a few years of disclosure, those gains from regulation should have diminishing returns, making it less worthwhile to bear the costs.
After several years as a NYSE listed firm, and therefore several years of history in a highly regulated environment, is the credibility margin worth the yearly audit cost anymore? Surely a firm with such history won't suddenly lose its reputation if it goes private or moves offshore? I suspect mid and large cap LBO firms might consider stalking foreign firms from countries with local exchanges of ill repute that have been public in the United States for 2-3 years already. If the theory holds, this should be right about the time when the costs start to hurt more than they are worth.
There are few things as sexy in this world as a woman who can look at a problem with the public markets-regulatory wealth transfers to companies with poor reputations-and see it as a money making opportunity. That said, one problem with this idea is that evidence has begun to show that the costs of SOX decrease over time. Getting compliant costs more than staying compliant, so the scale of costs and benefits is sliding on both sides. That's not to say it won't work but it would take some more work to see if it does.