Charlie Rose

Pleaselisten  02/26/2009 10:36 PM Report

Just curious as to why my last comment got removed. I would think that Charlie would have both accepted and approved of my thoughts.

I hope that this was just an oversight..

robert_CT  02/26/2009 04:49 PM Report

“Nobody saw this coming”

Mack is an idiot! The history of markets is a history of bubbles and any CEO of a major financial firm that couldn’t see the biggest bubble in history doesn’t deserve a job. I am a nobody with no special insight whatsoever yet I put 25% of my net worth into gold in late 2005 specifically because I thought that U.S. economic activity had reached an unsustainable frenzy and because I believed that such activity was built on a reckless and unsustainable increase in leverage. I am not a “gold bug” and had never bought gold in my life. I feared a complete collapse of the U.S. financial system and believed and continue to believe that we may witness the insolvency of the U.S. government or a Weimar Germany style inflationary spiral which are really the same thing. Time will tell but this scenario is a possibility. Furthermore I sold off all my financial stocks by October 2006 in anticipation that they would crash. While I wanted to short them I didn’t because being short is very challenging psychologically. I am now buying selected stocks including the financials in expectation that I will, with some luck, make at least a 500% return over the next five years. That is if the U.S. government doesn’t go insolvent, a real possibility, hence I continue to maintain by gold position.

So if someone like me had a sense of this impending disaster how couldn’t Mack see it? Has Mack ever heard of George Soros who warned of such a scenario beginning a few years ago. In addition, Soros has a view of markets that is at odds with the conventional economic dogma taught in American business schools and he has written several books outlining his ideas. Is Mack so dumb as to believe in the efficient markets theory?

I also note that Mack is one of the clowns who went to the SEC in 2005 and persuaded the SEC to change the regulations limiting the leverage for investment banks, thereby allowing MS to increase its leverage from approximately 12:1 to 31:1. And there is no doubt that Mack is one of the fools, along with Robert Rubin, Alan Greenspan and Larry Summer who argued against regulating credit default swaps and other derivatives. Of course Charlie Rose is Mack’s buddy so none of these inconvenient truths come up in this interview. I worked for one of the major investment banks for about 8 years in the early 90s and by my estimate only about 30% of the business activities at these firms relates to the real or productive economy. Sure they issue bonds and stock on behalf of real companies engaged in real economic activity but about 70% percent of what they do involves promoting hair brained mergers for the sole purpose of generating fees (i.e. AOL-Time Warner which I promptly shorted post merger); financing financings to generate fees (see CDOs and CDOs squared) and running speculative leveraged interest rate arbitrage portfolios (at the peak about 2/3 of MS’s, MER’s and LEH’s balance sheets consisted of nothing more than naked speculative interest rate arb positions which collapsed under the weight of their own stupidity). Then you have all the fee generating activities geared to private equity and hedge funds which are not part of the real economy but rather “helpers” to use Warren Buffet’s euphemistic term. In reality private equity and hedge fund firms are parasites on the economy who have learned to use the banking system and capital markets to turn the real economy into a big game of monopoly for their benefit. In short the financial services industry became corrupted by greed, arrogance, hubris and more greed. The investment banking/banking industry needs to go back to what it was at one time. A legitimate business that promotes real economic activity by making markets on behalf of real investors and that raises money for real companies.

Mack, Fuld, and Stan O’Neal should be forced to forfeit every penny they made beginning from the day they increased the leverage of their firms above approximately 12:1 Then we can debate whether they should spend any time in a federal prison for destroying the savings and livelihoods of so many ordinary Americans. Don’t get me wrong there is lots of blame to spread around but these people were at the center of this calamity and it was all driven by sheer unmitigated avarice. As it stands Wall Street is primarily just one big “pump and dump” operation that lurches from one scheme to the next. After the dot com bubble Wall Street needed another scam to generate fees and massive bonuses and when Alan “the ideological fool” Greenspan lowered rates to 1% he laid the ground for Mack and company to gin up the next bubble. The problem this time was much worse than the dot com bubble because it was built on leverage, hence the calamity we are now living through.

I wouldn’t be nearly so angry about this if these people had any sense of shame or contrition but Mack seems so pleased with himself because of the three of four weeks he spent huddled in his executive suites working around the clock to save MS. It would have been nice if Rose pointed out to this jackass that the firm wouldn’t have needed saving if it weren’t for Mack’s stupidity and greed. In any event Mack’s idiocy and incompetent management allowed me to take a nice position in MS on Oct-10 for $7.00 a share. I can’t wait to bail out of this stock in a few years time at or near the peak of the next bubble assuming of course that we aren’t running around with wheelbarrows of worthless money by then.

Mack, Fuld, O’Neal, et al. want us to believe that the system was swept away by some unforeseeable event but the reality is that the financial system collapsed under the weight of its own greed and stupidity. Nice work guys!

rosebud5  02/26/2009 04:05 PM Report

akingdom, you should watch the part you missed, Charlie disclosed that he and Mack are basically family via marriage and have been personal friends for 40+ years. I recommend you watch a Barnie Frank interview if you are interested in watching more of the witch hunt going in America today. I find this interview a constructive and honest conversation--refreshing against the current backdrop of the American public who have been cajoled into raving mobs looking to blame their own irresponsibility on Wall Street villans.

akingdom  02/26/2009 02:47 PM Report

I have seen a lot of cloying Charlie Rose interviews in my time but this takes the cake. I tuned in just as Mr. Mack was defending retention bonuses with a straight face. His body language indicated that he couldn't believe how easy he was getting it. There was no follow up. How about a question about where the hell these people would go if they decided to quit a company that didn't pay them a bonus. Another company on the verge of bankrutcy? Or maybe ask what they did to deserve them. It got to the point that I thought Charlie and Mr. Mack were going to start holding hands. The ending of the show says it all...John Mack..."and my friend."

smitch  02/26/2009 04:22 AM Report

I made a bundle out of unethical business practices; now if you have to pay the price it's coz you didn't get in there fast enough from cheating people in the same way.

smitch  02/26/2009 04:18 AM Report

I knew it would come at some point. I bought my five houses, two yachts and three businesses. You don't have a job? You can't pay your mortgage? well, you just didn't have the foresight that others had. Maybe you just shouldn't have invested in what I was telling you to invest!

smitch  02/26/2009 04:10 AM Report

What a hero. Defending us at whatever price.

tartufe  02/26/2009 01:54 AM Report

Bill Maher, on Tavis Smalley, had a great suggestion. We should Putinize the top 1% that confiscated most of the country's wealth. Namely, make them give it back. Physically. Works for me.

peternyc - WOW! A scathing assessment. Don't take your comments elsewhere. Keep em coming. That was great.

peternyc  02/25/2009 05:34 PM Report

I am disturbed by Charlie Rose's recent series of interviews with financial services titans -- in particular, the interviews with John Mack and Hank Greenberg. Perhaps the general tone/format of the program -- cozy, hunched-over-the-roundtable, personal chats with notables -- is at fault because it leaves little room for any sort of critical, "touchy" exchanges. Given the current state of our economy and society -- and the titans' direct involvement in creating the collapse we must sort through --it seems clear that we need frank discussions of the issues, not the face-saving "spins" that Mack and Greenberg provided. I doubt they would have appeared on the show if critics of their actions had also been invited. Their goal was to appear alone, as "great men" who have valued insight AND the final word. Basically, from a public relations perspective, the program was a good "placement" for them --a helpful image builder.

Both of these individuals discussed the economy in a safe, clinical manner, as if they were engineers examining a machine. Of course, our current difficulties far transcend any technical market considerations. Basically, the problems come down to the dark side of human nature: destructive greed and selfishness, along with a healthy dollop of laziness and incompetence. Greenberg and Mack are avatars of these negative attributes.

The Greenberg interview was particularly egregious. Near the end of his chat, Charlie Rose mentioned Greenberg's heroic activities during WWII -- a perfect cue for Greenberg to graciously acknowledge Rose's compliment and then follow up with some healthy flag waving -- "this country is great and it will be great again," etc. etc. etc. How extremely cynical all of this was, given that Greenberg's more recent life has had more than its share of rapacious behavior that has, in the long run, severely damaged the daily lives of our country's post-WWII citizens.

Perhaps Mr. Rose should stick to actors, writers, etc. The last thing the viewing public needs at this point is a large serving of disinformation regarding the financial crisis, comfortably folded into intimate roundtable chats.

I won't be watching this program any more.

ObservingTheScene  02/25/2009 09:20 AM Report

While I enjoyed the John Mack interview, his comments on justifying outrageous salaries are unjustifiable. The kind of rampant speculation and layer upon layer of speculation that created exorbitant compensation must be ramped down. And the riskier the speculative bet the more it must be backed up with cold hard cash. That will reign in compensation. And, if I've learned anything from running a business it is that there is an endless supply of good people. Everyone of us can be replaced.