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by Derek Loosvelt | October 24, 2008


The last 24 hours have been interesting to say the least, and the next 24 are primed to be just as compelling. Yesterday, former Federal Reserve Chairman Alan “Go” Greenspan admitted in front of the House of Representatives that he was "partially" wrong, saying he believed that markets do, in fact, need more government oversight and not less. (Before he begins to writes his memoirs, I’d like to point Al to a Bob Dylan lyric from the song “You’re Gonna Make Me Lonesome When You’re Gone” off his 1975 record, Blood on the Tracks: When something’s not right it’s wrong). In addition to his partial wrongdoing, Greenspan cited the securitization of subprime mortgages and bogus ratings given to them by ratings agencies as the root of the current crisis. (Thanks for the news flash, Al.)

Meanwhile, a few hundred miles north of D.C., Mike Bloomberg, the former Democratic media mogul turned Republican turned independent, received clearance to run for a third term as mayor of New York City, a move Mike says he’s making because he’s the only man who can keep the city afloat while the financial crisis rocks its economic waters. The city’s council passed the vote to let him go for four more by a margin of 29 to 22. All were certainly not pleased: after the votes were tallied, onlookers in balcony seats above the mayor cried, “The City’s for Sale!”

If it is, it’s probably going for rock-bottom prices, because today it looks like it’s going to be a fire sale in the markets: during our reveries, the overseas equity markets all took nosedives in response to lower than expected earnings reports, meaning domestic share prices are about to get hammered (as of 10:45 a.m., the Dow was down 400 points). Everyone’s jumping on the market panic attack (if not out high windows), predicting that today the Dow will hit the floor. Whether this is just another exaggeration or not remains to be seen, but to be sure, it’s not looking like a good day for jobholders, as companies will likely continue to announce layoffs given the ugly earnings reports. (Already this week, Goldman Sachs, Merrill Lynch, Barclays, National City, GM, Chrysler, and a host of others announced huge cuts.)

However, let’s not forget that one’s man’s panic is another man’s peace: BlackRock’s Chief Investment Officer Bobby Doll is looking forward to today's market slide, salivating at the prospect of all the stocks at low, rock bottom prices.

And just in (just as I was writing the above, in fact, so see: it is turning out to be interesting day): PNC announced that it will acquire the bleeding National City for more than $5 billion, creating the fifth-largest U.S. bank by deposits. Yes, this means more layoffs are in store for both firms once the integration begins (though hopefully, National City, which previously said it would slash 14 percent of its workforce, won’t make too many more). PNC will be one of the banks participating in the Fed’s big bailout plan; the rest of the participating banks could be announced as early as this afternoon.

On a final note, I was talking to a general partner of a private equity firm based in San Francisco yesterday about the latest developments in the ongoing financial crisis and he made an interesting observation about the investment banking fallout, saying that he hasn’t heard much from Blackstone recently, that they’ve been awfully quiet as of late, leading him to believe that Blackstone CEO's, the Billion Dollar Birthday Boy Steve Schwartzman, has something up his sleeve related to filling the gaps left behind by the death of the big investment bank. (Though Blackstone is mainly a private equity firm, it’s also an investment bank, hedge fund and real estate investor.)


Filed Under: Finance

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