Monday, September 22, 2008
Underwriting to undertaking.
James Surowiecki suggests that the downfall of Lehmann Brothers and the other (former-) investment banks was hastened (at the least) by their decisions a few years back to go public:
[F]or Wall Street firms, going public was a deal with the devil, because it meant exposing themselves to what was, in effect, a minute-by-minute referendum, in the form of the stock price, on the health of their operations. This was fine as long as things were going well—the higher the stock price, the richer everyone got—but, once things started to go bad, that market referendum started to look like a vote of no confidence. And that made the problems that the companies were already facing much, much worse. . . .
This doesn’t mean that stock prices don’t reflect reality—Lehman’s business really was in bad shape—or that Lehman would have survived had it been private. But being publicly traded makes it harder to take the long view and survive market storms. It’s possible that a year or two from now many of the toxic assets that financial firms have written off will turn out to have considerable value. (That, one assumes, is why the private-equity firm Lone Star Funds spent almost seven billion dollars, in July, to buy such assets from Merrill Lynch, at a steep discount.) However, public companies, in order to satisfy ratings agencies and convince shareholders that they were cleaning up the mess they’d made, had little choice but to dump those assets.
Via Scott Esposito, here is a terrific interview of David Foster Wallace by Larry McCaffery.
Friday, September 05, 2008
[H]ere’s how the Republican Convention looked: John McCain became a P.O.W. this week, at the hands of his own Party. It was Sarah Palin’s Convention, not McCain’s. His speech last night was so out of sync with the vituperative tone and stale, hard-right cultural populism of the Convention’s other headliners—above all, Palin—that he sounded less like a Presidential nominee than one of those token speakers given a spot on the program just to prove that the Party welcomes diversity. McCain stood before an arena full of stoked conventioneers, who seemed bored or turned-off as often as they seemed pleased by his remarks, and acquitted himself with the decency and honor that he summoned during the ordeal that defines his life.
Thursday, September 04, 2008
Image by Chris_J used under a Creative Commons license.
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