We pointed out the other day that Google had bought YouTube for about 1% of its equity. The Big Picture takes the analysis one step further, noting that after the rise in Google's share price following the acquisition, Google essentially picked up YouTube for free.

And if the stock keeps climbing, well, then Google picked YouTube up for less than nothing. The market is paying Google to buy YouTube.

Google Buys YouTube -- for Free [The Big Picture]

We pointed out last week that Apple has admitted that Steve Jobs played a role in backdating stock options at the company that is very similar to that of CEOs who have been indicted on criminal charges. And, as it turns out, Holman Jenkins-one of the smartest business writers around-agrees with us. "All in all, [the Apple backdating case is] a fairly typical case of backdating judging by the two detailed indictments, of executives at Brocade and Comverse, issued so far."

His longer description of the likely motives of Steve Jobs and Apple for backdating is worth reading.

"Backdating" has become the convenient formulation, but what we're really talking about is options granted "in the money." That is, the exercise price is lower than the market price, so the options appear to represent an instant accretion of wealth to the holder as long as the stock price holds up through the vesting period.

"Backdating" entered only as way to allow these options to receive the same preferential accounting treatment as "at the money" options.

Now if Apple's statement means anything, it means Mr. Jobs knew that selecting "favorable grant dates" allowed certain employees to receive "in the money" options. Let's not play dumb: He would have been the one deciding which employees got this benefit. Backdating, for all the confused huffing and puffing of the media, is not functionally different from grants of restricted stock -- and Mr. Jobs has shown himself a believer in such outright grants of incentive wealth: In 2004, he awarded four top executives (most likely the same ones who earlier received backdated options) restricted stock worth $25 million.

Mr. Jobs is not an accountant, but Apple's claim that he didn't understand the accounting implications of backdating should test our credulity for an obvious reason: Then why not just issue "in the money" options? Why adopt the baroque artifice of selecting a past date when the share price was lower?

Mr. Jobs clearly knew the purpose of selecting "favorable grant dates" was to produce "in the money" options. Is Apple simply saying he didn't understand that backdating was an improper way of making sure these options received the accounting treatment prescribed for "at the money" options? If so, his defense is the likely defense of several CEOs already in the dock. Luckily for him, we have signals from prosecutors that they intend to focus on "egregious" cases -- read "small companies without celebrity CEOs."

There's another twist to this. The people who are arguably hurt by Apple's backdating-who the SEC would be seeking to protect through a (highly unlikely) prosecution of Steve Jobs-would be the Apple shareholders. In theory, backdating deprived the Apple shareholders of material information about stock options grants at the company, making Apple's compensation costs seem less than they otherwise would have been. But in reality, any move to prosecute Steve Jobs would be a possibly lethal blow to Apple's share price.

A Typical Backdating Miscreant [Wall Street Journal]

At some level, of course all club deals are conspiracies among private equity buyers, and therefore bound to draw the attention of antitrust regulators. The question is whether they actually harm sellers-that is, the shareholders whose companies they purchase-or help them. Many of the larger private equity deals that get done would be all but impossible if various firms could not pool their resources and cooperate to make acquisitions-meaning, club deals are actually creating buyout premiums that wouldn't exist otherwise. Trust me, when a guy in the antitrust divisiion reads about this sort of thing in the papers he starts writing memos to his boss about subpoenas.

On the other hand, every now and then you'll read about how one group of private equity firms surprises another by making last minute bids on a target. This is considered "poor form" among the private equity folks, sort of like taking apples from the other guys basket instead of picking them off the trees. But that mentality is precisely what antitrust regulators are worried about-and probably can lead to some companies being sold for less than they would in a fully competitive environment.

At least some described the inquiry as an "inevitable" outgrowth of the evolution of the big-ticket buyout game. Wielding smarts, ego and capital, elite firms have clustered at auctions for a virtual buffet of the nation's largest companies: movie chains, satellite operators, newspaper companies, and semiconductor-makers among others.

To pay for such large targets -- with total price-tags of upward of $30 billion -- the firms have in recent years begun to partner into what have come to be known as "club deals." These clubs are largely limited to a handful of buyout firms with roughly more than $10 billion each in capital, such as Kohlberg Kravis Roberts & Co., Blackstone Group, Texas Pacific Group, and the investment arm of Goldman Sachs Group Inc.

These clubbing arrangements present both opportunities and problems for companies on the auction block. On the plus side, they allow for the assembly of the immense pools of cash necessary to bid on a large target in the first place. That in turn helps buyers spread the risk of any one transaction, which is another essential ingredient to making a bid.

Yet inside these clubbing arrangements is a fraught dynamic. While often ferocious competitors, the firms are just as likely to end up co-owners of a number of targets. For instance, two of the buyout world's top firms, Blackstone Group and Carlyle Group, are often on different sides of transactions. For example, when Kinder Morgan Inc. was considering a management buyout involving Carlyle earlier this year, Kinder's board hired Blackstone's advisory arm to evaluate the bid. But they are also bidding together to buy Freescale Semiconductor Inc.

In all, Carlyle has done 20 club deals since 2005, and Texas Pacific Group 25 club deals, according to Dealogic data. Some 44% of all $1 billion-plus buyouts are done in club deals this year.

Sponsored by Bloomberg.com

Morgan Stanley Fallout From Andy Xie E-Mail Costs Two More Jobs (Bloomberg)
Last week, Morgan Stanley economist Andy Xie was forced to resign after an email of his leaked suggesting that Singapore was a hotbed of corruption. The bank probably wants to keep doing business in Singapore, which is why he had to go. The fallout continues as the firm has axed two more employees who merely forwarded the email. One of the fired employees, Celicia Ong, is an equity salesman, and counts among her clients the Government of Singapore Investment Corp. Fortunately, for the two employees, their resignations won't go into effect until January, ensuring that they get their 2006 bonuses. Bonus!

Discounters Go on Road to Find New York Style (NYT)
Target has a pretty good thing going with its mass-market designer goods, like slick, cheap toasters made by interior decorating gurus. But for the most part, its rivals haven't been able to emulate this, and there's not a lot of cutting edge style sold at places like Wal-Mart, Kohl's and Sears. So, after years of failing to attract hip, young designers to their headquarters in places like Wisconsin and Bentonville, Arkansas; the companies are opening up design studios in New York, to get access to hip, edgy design. It's a good move. As stores like American Apparel and Japan's Fast Retailing (which runs Uniqlo) have shown that clothes can be cheap and painfully simple while still being stylish and reasonably well made. Still, if you're a young designer working for Wal-Mart, we'll forgive you if you say you design your own stuff that gets sold at A-Life.

U.S. Deficit Is Smallest in Four Years (LA Times)
The Republicans touted new deficit data that on its surface suggests the deficit is narrowing. Bush cited his tax cuts as the key economic stimulus, which then brought more money into government coffers. What's weird about this is how often this "less taxes=more tax revenues" meme gets repeated, as if it were a) absolutely true and b) a good thing. Since when is it good for the government to get more tax revenues? Shouldn't we worry about what the government will do with so much money to spend? And, yeah, we still have a $248 billion deficit. But the good news is that deficits don't matter.

Insurers Get an Earful From Senator (NYT)
Hint to the insurance industry: don't deny a Senator's insurance claim. Turns out that Senator Trent Lott was one of the thousands of homeowners to claim damage from Hurricane Katrina. And you'd think that a Senator would get the red carpet treatment, and get reimbursed at 150% of the damages, right? Well, perhaps in the confusion of the time, his company wasn't very helpful, and has been fighting the claim. Bad idea. Now he's launching an investigation into several aspects of the industry, including whether it's in violation of anti-trust regulation, and whether insurance companies are paying there fair share of taxes. There's that cliche about the way to get a conservative is to mug or tax a liberal. Apparently, the way to get a neo- Chuck Schumer is to dick around with Trent Lott's insurance claims.

$$$The couple that runs a hedge fund together, stays together. [Craigslist via W$F]

$$$Private-equity Schadenfreude [Banker's Ball]

$$$Trump does drugs (again). [Trump Blog]

Earlier today we reported that a source inside a Cablevision subsidiary had told us that there were widespread rumors that the Dolans might break-up the company, leaving the television channel and content oriented in a smaller public company while taking the cable operating and facilities business to a privately held company. This deal would be significantly different from the one publicly proposed by the Dolan family.

Now we've heard from the spokesmen for both Cablevision and the Dolan family. Both were perfectly nice guys but, of course, didn't exactly spill the beans and confess that we had uncovered their Super Secret Deal.

Cablevision: "It is Cablevision's longstanding policy not to comment on rumors and speculation in the media."

Dolan Family: "I can't comment on rumors and speculation. The Dolans remain committed to the deal they have publicly announced."

So the story is neither confirmed nor denied. Make of that what you will.

The Wall Street Journal has given over the lead spot on its editorial page today to Pattie Dunn. Fair enough, since it has run editorials by Dunn critics. And it's a bit daring of Dunn to go ahead and publish after she's been indicted on felony counts. In fact, we were so impressed by her unwillingness to take the usual "radio silence" while criminal charges are pending tact, that we found ourselves actually rooting for her while we read the piece.

"Come on, Pattie! You can do it! Convince us that you didn't do anything wrong here," we said to our newspaper, causing folks on the subway to give us a little extra room.

But she couldn't do it. Here's the gist of her argument: "I asked the right questions of the right people at the right times." In other words, it's all somebody else's fault. She did everything right. This is frustrating because clearly something went badly wrong with the investigation, and no one seems willing to take responsibility.

We won't go into all the details right now about what seems wrong with her account. But we'll mention a couple. Here's one that grabbed us: even though Dunn was actually at the congressional hearings she doesn't seem to get that people are tired of the circular blame passing that so frustrated the lawmakers. She quotes a "prominent outside attorney" as saying "the process was well done and within legal limits." But if she means Larry Sonsini, he's already on record as saying he was relying on Hewlett-Packard's inside lawyers to make this judgment. So bringing him into it here just confuses matters.

Then there is this whopper: "As a result of the extraordinary negative publicity from these episodes, the board as me to step down as chairman and director."

There are at least three things wrong with this. First, by calling the press attention to the pretexting scandal "extraordinary negative publicity" she seems to imply that it was unduly negative or that undue attention was paid to the "episodes." So she still doesn't get that this was a big deal.

Second, she says the board asked her to step down. Why didn't she take the initiative when it became clear to everyone else in the world that it was going to be impossible for her to remain chairman?

Third, she says the board asked her to step down because of the publicity from the episodes, rather than the pretexting episodes themselves. This may even be true but it's not helpful to Hewlett-Packard. It shows that they might still believe that it was all just bad press that was the problem and not the pretexting, privacy invading investigation itself. Or, as Dunn put it in another press account, it was a "disinformation" campaign that toppled her rather than the excesses of the leak investigation she set in motion.

The H-P Investigation [Wall Street Journal]

We're remaining very skeptical about everything we're hearing and reading about this afternoon's upper east side incident. Reportedly an aircraft struck the Belaire luxury condo building at 524 East 72nd Street. Flames can be seen coming from several apartments, and a tower of smoke is rising. But everything else seems confused. Conflicting reports claim it was either a helicopter or a plane. And it is obviously way too early to know if this was a terrible accident or a terrorist attack.

So we're sticking to what we know. Just around the corner from DealBreaker HQ in lower Manhattan, about sixty police cars have taken up position at the base of sixth avenue with their lights flashing. A patrolman who asked that we not identify him told us that they were awaiting orders, possibly including whether or not to start shutting down various tunnels leading into Manhattan. The Holland Tunnel is located just a few blocks away from where the police have gathered. So if you live outside of Manhattan, getting home tonight might be a little bit tricky. (And no, we don't think that whether or not you get home to your family tonight is trivial even in light of likely injuries or deaths uptown.)

We've also received reports from a midtown office building where at least some people are said to be afraid.

"People are having 9/11 flashbacks. One lady is sitting on the floor," said a source who is working at a major publishing company located near Times Square.

We've also heard from at least two people at Goldman Sachs, located at the other end of Manhattan, that people there are leaving their offices immediately. But we want more. What's happening where you work? Send information to tips (at) dealbreaker (dot) com or drop a note in the comments section below.

Update: A reader gives an account of the action at one bank located a bit closer to the incident than Goldman Sachs (but unhappily requests that we not name the bank): "As soon as I heard what happened I ran over to the TV at our old fund sales desk, a once-teeming hotbed of gossip and shiny young interns, now staffed by three swiss-german consultants. 'Where exactly did the plane crash!?' I gasped. They looked up from their computer screens and replied in dull, heavy accents — 'uh, New York' and went right back to 'work.' I hate this place."

Update: We just ventured out into the rain again to check on the Holland Tunnel. Moving along at more or less normal pace for a rainy Wednesday rush-hour. Looks like you will be able to get back to the Jerz after all. Oh, and it seems it was a Yankee and not a terrorist after all.

Merrill Lynch and Bear Stearns have each committed to provide the family that controls Cablevision with one-half of the $12.4 billion of debt financing the acquisition of the cable company, according to a letter filed with the SEC yesterday.

Of course, it's not quite accurate to say that the money is being provided to the Dolan family. The actual borrowers are Cablevision and a series of shell holding companies who secure the loans with Cablevision stock and assets. That's leveraged buyout magic-buying a company with money you don't have and collateralizing the loans with the company you don't own.

The competition to be the lead lenders on the deal was most likely intense, with at least a handful of banks submitting letters to the Dolans. The Cablevision assets are very valuable as collateral and the fees attached to loans of this size most likely quite large. One surprising aspect of the winning Merrill-Bear Stearns letter, however, is that it retains a full-throated due diligence "out"-a provision allowing the banks to refuse to lend money if their due diligence investigation turns up serious problems with the company. In heavily sought after deals, this language is often watered down.

Unfortunately, the real red-meat of the deal is not disclosed. We're talking, of course, about the bank fees and interest rates. These don't get disclosed because they are not considered relevant to public investors in a going private transaction. Since the public shareholders are being bought out, they don't have any economic interest in knowing what fees and interest rates the private company will be paying. So the fee letter gets kept under wraps.

Project Central Park Credit Facilities Commitment Letter [SEC]

Dolans Obtain $12.4 Billion for Cablevision Buyout [Bloomberg]

This was dropped in our mail bag last night. It's Aleksey's purported profile from CuteGirlsOnly.com. If we're to believe that his August 11 b'day invite was legit (and, honestly, how could it not be?), than this profile-- which says Aleksie is a Gemini-- is a total and complete sham. And that actually hurts a little. But putting astrological betrayals aside, we'd like to now share with you the most exciting part of this here (possibly real!) profile and that's Aleksey's alleged bisexuality! Yes, "Aleksey" is 6'4", Caucasian, and a BISEXUAL! There's enough of him for everyone! Happy days are here again.

That's the buried lede in Dale Kasler's Sacramento Bee recounting of the final hours of the auction for bankrupt Tower Records.

As first reported in the media, Great American's bid of $134.3 million for Tower's inventory was a mere $500,000 higher than Trans World's -- providing ammunition for the record companies to argue on Trans World's behalf.

But the real gap was about $2.3 million.

That's because Tower's investment banker, Houlihan Lokey Howard & Zukin, was in line for a higher fee if Tower was sold as a going concern, according to court records.

That tipped the balance clearly in Great American's favor, said the Tower source, who insisted on anonymity because he was not authorized to speak for the company. "In the end, it wasn't that close," he said.

We don't have all the details, but from the way we read this the fee for Houlihan Lokey was structured so that a going concern bidder would have had to beat the next highest bid by almost $2 million. It was hard to imagine anyone buying a bricks-and-motar music store with the intention to run it as a going concern in the age of downloading music. But buying it for more than $2 million more than its liquidation value? Never going to happen. And so Tower Records falls quietly into the ash heap of history.

How Tower's final hours played out [Sacramento Bee]

We've mostly avoided writing about the latest bit of grossness flowing from our nation's capital. But this morning we were reminded by Tim Carney's most recent article that the scandal may have some repercussions for American business and the markets. You see, just like Bob Dole was often referred to as "the Senator from ADM," disgraced congressman Mark Foley was "the Representative from American Sugar."

Sugar is one of those things that probably shouldn't be made in the United States. If not for the subsidies and protectionist restrictions, we would probably import almost all our sugar. But politics has kept sugar American, and Foley has been at the forefront of the Sugar Patriots on Capitol Hill. Not surprisingly, he has been heavily rewarded by the American sugar industry for his votes. With Foley gone, the sugar industry has lost a powerful and dedicated ally. This could mean trouble for these politically dependent companies, and it could mean cheaper sugar for everyone else.

Foley was also a Citigroup favorite. Here's how Tim Carney explains the bank's relationship with Foley.

Over his career, Foley received more than $30,000 from Citigroup, the eighth-largest corporation in America. Citigroup is betting big on wind power, predicting in the company's "citizenship" report: "Renewable energy in the U.S. and abroad is expected to attract several billion dollars of financing annually over the next 15 years, with wind power driving much of this growth."

In 2004, Citigroup invested $23 million in a factory to build wind generators in India, selling them into the U.S. In 2005, Foley introduced a bill to extend a special tax credit allowing Citigroup's customers to reduce their tax bill by 1.5 cents for every kilowatt-hour produced.

[Note: Tim Carney, author of The Big Ripoff: How Big Business and Big Government Steal Your Money, is the brother of DealBreaker's John Carney.]

Big business loses a buddy with Mark Foley resignation [Washington Examiner]

Rumors are circulating within Cablevision that the proposed buyout by the company's founding Dolan family may break the company into two parts, according to a source familiar with the situation. The Dolan family made a bid to take the company private earlier this week but the talk within Cablevision is that the company may be split in two-one company privately owned by the Dolans and one company remaining public.

This is how people are saying the deal would work. A new private company owned by the Dolans would acquire the cable system operating company, as well as assets such as the Knicks and Madison Square Garden. The public company would be left with only the "content" heavy units, such as its various cable television channels. The two companies would operate independently, with the Dolans wholly owning the new private company and maintaining a large stake in the public company.

YouTubers have begun posting videos reacting to the Google acquisition. Despite fears that getting scooped up by a big company might tarnish the YouTube's image in the minds of its most loyal users, the overwhelming majority of these videos seem very positive. Far from crying "sell out," most users seem happy with the Google buy-perhaps hoping that their little corner of fame on the internet will become a little bit bigger.

The video we've embedded above is actually quite imaginative in its vision of what GoogTube might look like.

Aleksey Vayner's attempt to quell distribution of his "Impossible Is Nothing" video won a small victory yesterday and then suffered a quick reversal. After his video became an overnight viral sensation-first making the rounds in emails forwarded around investment banks and then on blogs-Vayner initially removed the video from his website.

When the blog IvyGate responded by uploading the video to YouTube, Vayner sent cease and desist letters to IvyGate and other websites which embedded the video (including DealBreaker). He also asked YouTube to remove the video. Last night IvyGate received an email from YouTube, notifying them that they were indeed going to remove the video. Vayner probably went to be last night feeling like a champ.

IvyGate, however, wasn't going out like that. It lawyered up and got reassurances that posting the video would count as "fair use." And now the video is back up, this time at Veoh.

Calling Aleksey Vayner's Bluff [IvyGate]

Reuters reports this morning that the total assets of Amaranth were around $2.78 billion at the end of September, which probably means the numbers are even lower this morning. Presumably Amaranth, which has announced its plans to liquidate, continues to sell assets and honor investor redemption notices.

It's probably a good sign that assets are still as high as they are and that Amaranth continues to employ as many people as it does. It shows that Amaranth is not exactly conducting a fire-sale. Rather, they seem to be actually trying to have an orderly wind-down, salvaging some value for investors through asset sales.

At least that was our argument to a friend in the investment community last night. He disagreed. His position was that Amaranth should get rid of everything and everyone right now and get its investors back all their money now.

"If I had money in Amaranth, I'd want it out now. I can make more with my money buying things that work than they can selling things that don't," he said.

We looked down into our glass, wondering if anyone else had overheard the conversation. The bar was very quiet. Mostly the jingle-bell sounds of icecubes in glasses. Everyone had heard this rant of the angry capitalist. At least it was over.

Then he started up again. "They've still got hundreds of employees? They're being nice and finding them all jobs. Fuckers. Are they a labor union now? Who told them this was the way to spend investor dollars? If I were an Amaranth investor I'd be pissed that they were still turning the lights on over in Greewich," he said.

We took a long draw on our scotch. Ice banging against our teeth and wondering why our instinct was to imagine ourselves as an Amaranth employee while our friend could only see himself as an Amaranth investor. Some of us, it seems, are born to work for others. And some of us are those others.

Amaranth Advisors LLC on Tuesday disclosed its net asset value has fallen nearly 70 percent in September from a peak of $9.2 billion in August after wrong-way energy trades decimated the once-prominent hedge fund group.

Greenwich, Connecticut-based Amaranth, which previously estimated it lost 65 percent to 70 percent of its assets in bad commodity bets in September, disclosed the latest results in a letter to investors Tuesday obtained by Reuters.

Amaranth suffered a $6.4 billion loss -- the worst hedge fund loss ever -- in September, leaving the firm with about $2.78 billion at the end of the month from a peak of around $9.2 billion in August.

Amaranth net asset value fell 69.8 pct in Sept [Reuters]

All the blogs at the New York Times are "temporarily unavailable" this morning, so we won't be posting a shorter DealBook today. It's no fun if we can't get it up over breakfast.

Sponsored by Bloomberg.com

At Alcoa, Lower Metals Prices Curtail Increase in Earnings (WSJ)
We're on the cusp of earnings season, so it makes sense to kick things off with the company who's ticker is AA. First, the good news. Earnings surged 86% helped by a global commodities boom, which lead to both higher volumes and higher prices. And now the bad news. Despite the higher prices, prices already showed signs of softening (that's the fist derivative in action). Weakness coming from auto and housing also hurt the company. While the company is still the biggest aluminum maker in the world, it may have to relinquish that title, as Russia's Rusal has some major dealmaking in the works. But don't let one report dash your day, just keep repeating the phrase "sector specific" over and over again.

Shakers: Fiorina ready to run 'the right company' (IHT)
After some time in the corner to think about her mistakes, Carly Fiorina says she's back and ready to run a company again. Well, not just any company, but 'the right company'. Fiorina also said, in an interview, that she'd consider public service; she'd once been on a short list of people to run the World Bank. But does the Carly name actually hold that much appeal. She's always been something of a superstar, but more one of those newfangled superstars that doesn't have any fans. Our advice? How about a daytime TV talk show, Carly?

Iran's Ahmadinejad blames media for inflation (AFP)
We were beginning to think that Mahmoud Ahmadinejad only dealt with international issues, like his hatred of President Bush or his desire to roil markets. If only for the benefit of the Iranian people, it's good to see he has domestic interests as well. His latest cause is inflation, and he's blaming the media for the problem. He says the media's unrelenting focus on rising prices is leading to more rising prices, and that his government is far from the first to see this happen. Speaking directly on poultry prices, he said a bird cull in February to fight bird flu was to blame. Ahem.

Dow Ends Up 9 in Its Fourth Record Close (AP)
The annoying thing about being in record territory is that every up day, no matter how small, constitutes another record. Dow up 9? Break out the champagne baby. Granted, it's better to be at these altitudes than not -- and may all markets have these complaints. But perhaps we could just hold off on the day-to-day record watch; maybe just make not of it every 100 points. And if we're irritated just reading articles, think about how annoying it must be for officials from the Guinness Book of World Records. Every day after the market closes they need to send someone out to verify.

$$$The Heebs over at CampusJ are Jewing it up in honor of YouTube's big sale: create and submit your "best Jewish-campus-themed video to YouTube," send CJ a line about it and they'll award the winning entry a whopping $1.65, which, being Chosen People, we think is an assload of money. [CampusJ]

$$$"Ivy League Banker looking for a drink tonight." Aleksey, is that you in there? [Craigslist]

$$$Drinking with London gay bankers. [Things I Can't Tell Boyfriend Number 1]

You asked for it, so we got it. In the party invitation we mentioned earlier, Aleksey Vayner mentioned an press release promoting his book, Women's Silent Tears. And yeah, you've heard of this book before. It's the one that IvyGate discovered to contain passages amazingly similiar to those found in the online Holocaust Encyclopedia.

After the jump, you can read the release.

One of the best places to find out what really went down at Amaranth at the end of this summer was the Platts news service, which is pretty much the go-to for energy news. Well, the go-to place if you have plenty of cash to fork over for the subscription only service. Today they picked up on Amaranth's latest SEC filing. The damage is severe. The funds stock holdings are down to $175.2 million.

Here's an excerpt.

The value of hedge fund Amaranth Advisors' stock portfolio dropped 97% in the third quarter, according to filings with the US Securities and Exchange Commission, as the fund was forced to liquidate the bulk of its holdings to meet margin calls on more than $6 billion worth of bad gas trades.

Amaranth controlled $175.2 million worth of stocks and puts and calls on
those stocks at the end of the third quarter, the Tuesday filings showed.

By comparison, Amaranth's stock portfolio was worth $5.7 billion at the
end of the second quarter, according to SEC filings.

Stocks and puts and calls on those stocks made up an undetermined portion
of Amaranth's investments.

You didn't actually think we were going to make through an entire day without mentioning Amaranth, did you?

In light of the rampant levels of douchebaggery (in practice and in speech) these days, we've got something to say: it matters not whether you are of the douche bag variety or not, only that you fucking man-up and OWN your female cleansing product status. Mark Foley: a douche bag, yes, but doubly a douche bag because he doesn't own it. So you IM underage pages asking them if they're made "horny" by your presence-who cares?! You like them young and boyish and all we have to say about that is, more power to ya, sister! But the fact that you can't just go, "Hey, Congress, I like them young and boyish and I don't think I have to explain myself to anyone, let alone you people," and insist on blaming your alcoholism, menstrual cycle, etc. really gets our goat; gets us angry, if you will. So much so that we've been popping blood vessels all afternoon thinking about how much we want to do something about it which means we'll probably try and drink away our rage the second we get out of the DealBreaker Janitorial Closet tonight, pass out in a gutter and render ourselves unable to do anything about it; all your fault, for not owning it.

Same thing with erstwhile virgins Chad Hurley and Steve Chen. Inherently nerd-douche bags they are but doubly nerd-douche bags for not holding out for the big money. Everyone knows Sergey would've spent at least $5 billion to have LonelyGirl15 all to himself; "she hasn't responded to any of my Gmail invites, I don't understand!" he was heard saying the day he convinced Larry that buying an unprofitable company would "be a shrewd business move, no matter the cost." Now FaceBook is soon going to make their deal look like pocket change and the only thing they'll be left with is their double D status because they didn't own it.

We refer the above and all those out their who are guilty of not owning it to one man who owns it so fucking much that even the New York Times, a lady who NEVER uses the word douche bag, has come out and recognized him for owning his aforementioned bagginess: Aleksey Vayner. Study him closely and all you douche bags will go far.

BTW:

Donald Trump (a guy who ALWAYS owns it): La Guardia to Reno Tahoe Int'l on his Boeing 727-100

John Travolta (a guy who never owns it): Newark/New York Liberty Int'l to Hamilton Airport on his Boeing 707-100

Warren Buffett (obviously a guy who owns it, bought it in petty cash, in fact): Boca Raton to Palm Beach Int'l on his Gulfstream IV

The blog for the 92nd Street Y has an interview with former Carly Fiorina up today, in advance of her talk there on October 15th. Somehow they get through the entire interview without once mentioning the word "pretexting" or the name "Pattie Dunn" to her.

Here's how it starts.

1. When most people think of a bi-coastal life, New York/L.A. comes to mind. How would you describe the life of D.C./Silicon Valley splitters? Most people think of D.C. and Silicon Valley as totally separate worlds. Certainly geeks and wonks speak different languages. And, in the summer, the evenings in D.C. are hot and damp, while the air in Silicon Valley is cool and dry. But it is the things the two places have in common that I love: the view of the water-although one's a river and one's a bay; the towering monuments-although some are marble and some are redwood; the beauty of the rising and setting sun-although in one place my view is framed by bridges (Memorial and Key) and memorials and in the other by mountains. Two beautiful places where the people who live there think they're the center of the universe!

Now go read the rest.

92YQ: Carly Fiorina [92Y Blog]

After the jump we bring you what we're told is Aleksey Vayner's invitation to his birthday party. Spectacularly normal, really. He's no Lucy Gao. And don't worry if you are under age. Aleksey can still totally get you into the club.

Guess who is living here? That's right. It's Kobi.

We kind of imagined that Kobi Alexander's hideout would look something like Luke Skywalker's childhood home on Tatooine-all desert plains and little sand igloos. But that's because we don't know much about Namibia. As it turns out, he's staying at a place that looks like a Georgia retirement community for wealthy folks. The blog for CNBC's On The Money has about a dozen pictures of the place.

And while we're on the topic of the fugitive poster-child for the backdating scandal, we might as well mention that Namibia it totally hot now. Not hot like Tatooine. Hot like, uhm, whatever's totally hot now. Apparently, Kobi's flight to Namibia has sparked a tourism surge to the country.

While some spent last night losing their long-preserved virginity, others found themselves in an apoplectic rage of "Hows," "Whys," and whatever amount of crystal meth they could get their hands on. We're talking, of course, about Yahoo (and Lucy Gao, for not having made a video herself). The company's stock plummeted by more than 2% to a 52-week low and, as DealBook reports,

This [Google's recent impulse buy] increases the pressure on Yahoo to do something. There is this perception that Google is not just executing well but that it is also being more aggressive...BusinessWeek and others speculate that the YouTube deal could force Yahoo to push harder for Facebook, another social-networking Web site. Yahoo has already offered $1 billion to buy Facebook. Some months ago, there was a report that Facebook's owners had wanted $2 billion for the company, which, at the time, struck many in the industry as ridiculously high. Now, BusinessWeek wrote on Tuesday, "a price north of $1 billion might be more achievable."

After YouTube Deal, Eyes Turn to Yahoo [DealBook]

We're not sure that Pattie Dunn deserves to be charged with felonies. But we are sure that she, like, totally deserves to be burdened with the responsibility for the leak investigation that went too far. She was the one who initiated it.

Her denials are actually getting weird. At the congressional hearing, Pattie tried to pass the buck to Mark Hurd. Now she's blaming Tom Perkins.

"It was a disinformation, a classic disinformation campaign," Dunn said. "He set the mind-set for basically everything that's believed about this right now."

Okay, Pattie. Can we talk for a minute? This isn't helping. You are sounding even more paranoid now than everyone already thought you were. Perkins might have it out for you but he doesn't need to orchestrate a disinformation campaign to convince people that your investigation went too far when it started stealing the phone records of Hewlett-Packard board members. That just plain old information.

Ex-chairwoman says director instigated 'disinformation'[Reuters]

[Editor's note: Aleksey still hasn't granted our request to interview him. So we sent DealBreaker travel correspondent Bess Levin deep into Aleksey's brain. This is what she came back with.]

As many of you may very well already know, my adoring fan base has taken to calling me, of late, a douche bag. Being an immigrant who's only offered the (obviously inferior) English language a cursory glance up to this point (see my motto: "Impossible is Nothing." Doesn't even make sense, right? NB, Graydon, you can just copy and paste that into my Proust Questionnaire), I had to defer to dictionary.com on this one and, as per us, things are just as I expected-- you people love me! Lots of talk about "cleansing" and "vaginas" and all good, positive things like that. I've said it before and I'll say it again-- you people love me! As a token of-- I don't want to say gratitude 'cause that's not the right word, but how about this-- my effort to let you suck at the teet of greatness that is me, I've cooked up something special. Had a little downtime last night as a result of dance practice being cancelled-I won't say who's been slacking but it could be one of two people and it's not me, hint, hint-and I put together a little photo album for what I anticipate will be your immense pleasure. Enjoy looking at me as much as I always do.

This is me and my friend, Bobby, at Yale. Notice how
I almost completely blend into the background, like that
picture of Zach Braff in Garden State. In other words,
his shirt was the same pattern as the wallpaper,
so it looked like he was a part of the wall, and my
otherwise superior being blends into the
landscape of the most superior academic institution on earth.
Also notice how I'm letting Bobby mount Mt. Greatness,
i.e. me, so, if he's lucky, a little Greatness might rub off on him.
I'm a very generous friend.

It's all plagiarism, publicity and murder today in Aleksey Vayner. Gawker and IvyGate are full up with reader emails about the young man. He's made it into the mainstream media--not just the New York Sun. Our favorite comment comes from one Gawker reader who notes: "It seems that he learned his English by watching late night infomercials. His speech is just a randomized string of motivational cliches."

• IvyGate spills all it has on Aleksey. The gist: bragged about killing people in Tibet, kinda sucked at tennis, might have ripped off his hedge fund's website, totally ripped off his cease and desist letter, and comes off as, you know, totally crazy-pants. [IvyGate]

• Gawker uses up its monthly quota on the word "douchebag" trying to sum up its readers thoughts on Aleksey. [Gawker]

• Aleksey hits the Associate Press, who note that Aleksey was "highlighted on blogs" but seem a bit allergic to noticing which blogs actually highlighted it. (Credit should go to IvyGate, Wall Street Folly, Gawker and some other blog you've probably heard of.) [Houston Chronicle]

• Aleksey finally goes international, hitting Britain's Metro website. [Metro]

• Aleskey is fit to print. He's made the New York Times now. [DealBook]

Thoughts, hopes, dreams or memories of Aleksey Vayner? Send 'em our way: tips (at) dealbreaker (dot) com. Thanks!

Private-Equity Firms Face Anticompetitive Probe [WSJ]

The blog Mahalanobis points us toward what must be the best job entry of the week.

Financial Services Company- TheLadders Client
Job ID: 625904
Location: El Segundo, CA
Position Type: Full Time
Date Posted: 10/6/2006
Hedge Fund Private Investigator
Hedge Fund Private Investigator We are seeking a select group of candidates driven by a strong work ethic, team orientation, and a desire to succeed to join our growing successful company. The Hedge Fund Private Investigator will conduct both clandestine and covert intelligence operations to track movements of public company executives (e.g., Enron types) to gain deep insight of how their behavior and actions may be affecting the company's Wall Street performance. Job Responsibilities: Clandestine / covert intelligence research operations. Resume of successful case records Comfort with rigorous travel itineraries

Wanted: Hedge Fund Spies [Mahalanobis}

Backdating. Pretexting. The excuse is always the same-everyone else was doing it. (Or "Larry Sonsini said it was okay.") And it's lame. And Warren Buffett has had enough of it.

The "Sage of Omaha" warns that poor corporate governance cannot be forgiven just because the practice is widespread. "The five most dangerous words in business may be 'everybody else is doing it'," wrote Mr Buffett, who has long been sceptical of stock options as a means of remunerating executives.

Buffett orders crackdown on unethical practices [FT on MSNBC via W$F]

Chad and Steve talk about Googtube. They are so goofy and normal it will make you hate them even more. Because It. Could. Have. Been. You.

We have to admit that sometime in 2001 we became convinced that the era where you could start an internet company and two years later sell it for hundreds of millions was over. After the first internet bubble burst we assumed that companies located on WWW street would forever be discounted by big money burned in the bubble.

But we were wrong. A smarty pants website can still make you rich, especially if it's user driven and counts as two-point-oh. Does this make sense? Mark Cuban, at least, think Google is kind of dumb for buying YouTube.

It will be interesting to see just how google reconciles selling videos like Crazy in Love from Sony, when the same video is available as a user upload for free from youtube.

it will be interesting to see how Fox reacts to this deal Fox owns content. Neither google or YT does. Could Fox, the owner of Myspace put GooTube in a huge hole by being legally aggressive and going after every video of Stewy from Family Guy , American Idol, any of their TV shows ? The same with their movies. Beyond just Gootube, (and I mash them together with nothing but love :), Fox could make them look real bad by using supoaenas to go after individual Gootube users. Fox is also a stickler for DRM, they aint gonna like having their content floating DRM free around the net. Sure, myspace would have to clean up some of their own videos, but it would be a far easier chore than Gootube has. Now that would be a celebrity lawyer match worth watching.

I still think Google is crazy [BlogMaverick]

UBS was the financial firm from which the Aleksey Vayner video first leaked, according to certain press accounts. A link to the video was attached to Vayner's two-page resume. We were, of course, one of the first places on the web to link to the video, and certainly the most popular. DealBreaker values our sources so much that we cannot reveal where we got the video. Nonetheless, we can say that it wasn't someone at UBS who sent it to us. So lay off, you Swiss bankers.

Got more Vayner news? Send it our way. Tips (at) dealbreaker (dot) com. Thanks!

Sponsored by Bloomberg.com

Private-Equity Firms Face Anticompetitive Probe (WSJ)
The Justice Department has launched a probe into possible misdeeds in the private equity industry, the Journal has learned. So far, the bureau is in the document-requesting phase (i.e. fishing expedition phase), as it has sent notices to the likes of KKR, Silver Lake and others. It wasn't hard to see this coming. Several of the biggest deals, of late, involved multiple firms. And considering that there aren't that many big players in the space, coordination can't be too difficult. The goal is to avoid the "Winner's curse", the unavoidable fact that in a multi-party auction, the party that wins is the most likely to have over-bid. Still, not even out-and-out collusion could make a company sell for a price it didn't want, so any allegations of anti-competitive behavior should be weighed in this light.

Scientists Probe North Korea Nuke Test (AP)
The last thing the world needs is a humiliated Kim Jong Il, but there appears to be growing doubt that North Korea actually tested a nuclear bomb. Or if it did, it was either very small or a total dud. Maybe this is good news politically, but it's not good news for the Dollar, which sold off due to the calm reaction around the world to the blast. As one analyst from Morgan Stanley put it, "The nuclear test does not necessarily mean North Korea immediately launches an atomic bombing on Japan." That's good. It's not clear what lasting effect the test (if it actually occurred) will have on the North Korean won, which up until 2001 was sold at a fixed rate of 2.16 to the dollar, a level apparently determined by Kim Jong Il's birthday, February 16th.

Oil Rush Lures Small Investors (WSJ)
You have to have some respect for the small investors who aren't satisfied with an energy ETF, or just buying oil futures from an electronic oil exchange. Some of them don't like dealing in paper and fiction, and deliveries that they'll never deliver, and receivables that they'll never receive. Instead, they just have to own the well outright. The idea of selling wells directly to naive investors with the promise of riches is an old one, and if you go to Texas, you'll find a lot of people with a well or two in their family. Well, the trend is back, and once again, people are snapping up wells. Of course, the timing has been atrocious. Already, royalty checks are plummeting, and production seems likely to slow at many of these. This is not to mention that inevitable well that turned up completely dry, which has to be frustrating. Still, perhaps it's all worth it, just for the site of one gusher, spewing Texas Tea all over a corn field.

China Sany wants to build plant in U.S.-executives (Reuters)
The ongoing trend of Asian manufacturers setting up shop in the US continues The newest one is China's Sany, a maker of heavy machinery, which says it's looking to open up a manufacturing facility in the US. Considering the pace of new factories being opened by both Japanese and Chinese companies, it's really hard to make the argument that the US just isn't a good place for industry.

$$$GoYTube [WSJ, USA Today, AP, Gawker, DealBreaker, sergey.blogspot.com]

$$$Ali G., VC's, etc [YouTube (it's not over 'til it's over, bitches)]

$$$Working for a hedge fund in Tokyo-- less Scarlett, more cartoon porn. [Banker's Ball]