An Interesting Spin on Ratings Agencies

I don't think too many people would argue that the current system of ratings agencies is anything other than deeply flawed. The out-and-out fuckery (for want of a better word) that took place leading up to the financial crisis would have been enough to drive any other industry to extinction, yet the ratings system persists largely untouched today. The following video describes a new model for sovereign ratings, a model that is transparent, doesn't involve conflicts of interest, and most of all is free for anyone to use. In an industry begging for disruption, do you guys think a model like this could work? Think about it: if you removed all the conflicts of interest (most notably clients paying for their own ratings) and published for free the ratings of all countries, wouldn't the sovereign debt market run more efficiently?

Not So Fast: @GSElevator Loses Book Deal

The vampire squid giveth, and the vampire squid taketh away. Not that they really had anything to do with the following. On the heels of a very public outing, the voice behind snarky Twitter (and WSO) account @"GSElevator" John Lefevre has reportedly lost his recent book deal with Simon & Schuster. Perennial butt of his jokes Goldman Sachs wasted no time in gloating on Twitter:

The reason the book deal was pulled? Ostensibly it was the fact that Lefevre never actually worked at Goldman, but I think most of us would agree that's probably bullshit. I mean, at least Lefevre is a fellow finance guy who knows about which he speaks, whether or not he ever personally recommended the purchase of CDOs before going short himself. Far more likely is that fact that his outing cost him some of his mystique, and for Simon & Schuster the very possibility of decreased book sales was enough to yank the deal.

Monday @Mentions March 10, 2014

Thread of the Week:

It was no contest this week as @"big unit" knocked it out of the park with Young Money? Perception vs Reality on Wall Street. He goes into his experience starting at a bulge bracket during the meltdown and points out a few of the misconceptions that exist today about the new generation on Wall Street. The post earned him 31 Silver Bananas, 6 Facebook Likes, and 3 Tweets. Excellent work, man!

Comment of the Week:

Comment of the Week this week goes to @"D M" for his insights into the exit opps in corporate finance. His comment earned him 5 Silver Bananas.

Caption Contest Winner:

Congratulations to @"danin650" for being this week's Caption Contest winner. You can see his prize winning caption here. Enjoy your WSO T-shirt!

How I Spent My Summer Vacation

mod (Andy) note: "Blast from the past - Best of Eddie" If there's an old post from Eddie you'd like to see up again shoot me a message.

"Bless me, Father, for I have sinned. It's been twenty-one months since my last decent steak."

Tyler Durden's Guide to Personal Finance

mod (Andy) note: "Blast from the past - Best of Eddie" - This one is originally from April 2010 . If there's an old post from Eddie you'd like to see up again shoot me a message.

Note: This post is in reference to the movie Fight Club, not the crew from ZeroHedge.

Bonus Bananas March 7, 2014

1) Traders' stress could cause the next financial crisis (CNBC) - New study shows that the stress level of traders could lead to the next major financial crisis, so please guys - keep self-medicating. Substance abuse is only a problem if you're poor.

2) The Face Behind Bitcoin (Newsweek) - Thought I'd run this link again since it's the story that basically broke the Internet yesterday. As well-reasoned as it sounds (I find it plausible, anyway) there is now considerable doubt that this is actually the guy. Whatever you think about Bitcoin, you have to admit - it ain't boring.

3) The Dark Power of Fraternities (The Atlantic) - There's no shortage of frat rats on Wall Street. Here's how they got to be the worst people on Earth. Oh, and all the drunken frat boys falling off of roofs? Darwin in action.

4) Twitter is installing log cabins from the 1800s in its San Francisco office (The Verge) - Because fuck Facebook, that's why.

Satoshi Nakamoto Revealed?

The Bitcoin saga gets weirder by the day. Newsweek thinks they've found Satoshi Nakamoto, the enigmatic creator of Bitcoin, and they might be right:

This following the mysterious death of a 28-year old Bitcoin exchange CEO in Singapore:

Very strange. Interesting that he's just a humble engineer living in a regular neighborhood in L.A., despite being worth nearly a billion dollars now.


Stanford Just Ganked Martoma's MBA

Wait...what? Can they do that??? Apparently they can. Stanford's Graduate School of Business has rescinded Matthew Martoma's 2001 offer of admission, effectively saying he never attended grad school there, and thereby no longer has an MBA from the vaunted institution. How's that for revisionist history? No word yet on whether Stanford will be returning the estimated $165,000 they charged Martoma to attend.

To be fair to the school, Martoma is a world-class shitheel who was thrown out of Harvard Law for faking a transcript before changing his name and heading out to Palo Alto. That's to say nothing of his later shenanigans at SAC which teed up the next couple decades of his life behind bars. Still, this is the first time in history Stanford has ever stripped a graduate of their MBA, and that's probably true of just about every grad school in the nation. Even Raj and Jeff Skilling got to keep their lambskins (from Wharton and Harvard, respectively).

Stanford spokeswoman Barbara Buell declined to comment on Mr. Martoma's record, citing privacy laws.

However, when asked about the school's general policy, she said, "We take very seriously any violation of the integrity of our admissions process," she said. The school has provisions for revoking degrees or acceptance offers if a student is found to have gained admission through false pretenses, she added.

Dick Bove: Bank Stocks Set to Double

If you're looking for an easy double, Dick Bove thinks there's no better place to find it than the very bank you're working for. In the following video he explains his thesis that bank stocks are set to double based on healthier balance sheets and better business practices. I personally haven't given the sector a hard look since 2009 (when it was all FAZ all day every day), so I'll admit that I'm intrigued. Still, while BAC at $3 was kind of a no-brainer, is the same true at $17? Are we really going to see GS back above $300? Interested to hear what you guys think.

Should We Be Worried About Ukraine?

Going to be a short one today, guys, because what I'm really looking for is your feedback. Depending on whom you believe, we're either on the brink of WW3 or the whole thing is basically over, so move along there's nothing to see here. Obviously my primary concern is the potential impact on the market (as mercenary as that sounds). Yesterday it got knocked around a bit, but today all the world markets are up, presumably on hopes of de-escalation.

So I'm wondering how seriously we need to take this. The whole mess in Turkey a few weeks ago made the market look shaky, and now there's this, so I'm forced to wonder if the market is just looking for an excuse to go lower in dramatic fashion.

And then there's Bitcoin. I buy BTC every Monday morning, and I got mine yesterday for $582.97. At one point yesterday it went over $700, and that was before I had dinner. I'm not sure if it's oligarch money trying to find a way out of Russia/Ukraine, if we have Her Royal Majesty to thank, or if an unknown New York bank regulator's off-hand comment is the cause. If Bitcoin becomes a flight to quality in times of turmoil, well, then we've got a whole new ballgame.


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