Charlie Rose

kurumi  12/26/2008 07:50 AM Report

I work in forestry, although my company is based outside of the USA, so I am from Main Street. I worked for a short time in one of the 5 big investment banks Mr Greenberg mentions, very similar to the one that he represents so I have seen a little of both sides of the fence.

If an impartial outside observer, say Aliens,e.g., "Green men from Mars" were watching the events on earth their conclusions would be:

The true correct conclusion behind the financial sector and this "crisis" is that banks have succeeded in cornering everybody else in the economy. The Banks cannot lose. They literally hold everyone at gun-point.

So when they smell that they are going to have problems, they take no responsability for their prior actions and do a very smart, simple and effective thing, they start yelling "Financial Crisis" (bloody murder), the media hypes it all up with words like "Global" and pseudo-technical words like "Systemic", all kinds of "economic experts" (you gotta love experts, and the economic kind, they take the cake) state that "This is major!", "This is about confidence in the economy!", and Mr Greenberg says "well after 60 years I have never seen anything like it, it is the "Real McCoy"".

So they hype it all up, then everybody get's scared (fear is the quickest and most effective motivator) and then everybody stops trading, retracts and you have it, voilá...A crisis, made to order, to save the banks from their own foolishness and help all these financial sector guys hold on to their meager pay-checks and slim bonuses and all the little money they made in those bullish fun years.

Start yelling FIRE,FIRE and running in a busy street and see how many seconds it takes to get everybody's attention and everybody running.

In Wall Street, you just change FIRE to CRISIS.

Looking only at facts, the scenario is simple:

a)Over a long period the north american financial sector was administered recklessly with money constantly flowing in and too many bad loans being written. Some pieces of strange paper (to use Warren Buffets great analogy) started being traded and the people that should have said, well these loans aren't for real, they are just "make believe" loans were silent (or silenced). The money lent though and all the fees earned was very real. These financial sector guys were very respected and obeyed, probably because they shine like success, ride awesome cars, have majestic homes, wear these very nice suits, expensive drinks, perfumes, watches, restaurants, Ivy league education, sponsor all these charities...they gotta be smarter than those Main street guys, they gotta be geniuses...that is why everything they do is so expensive, they are geniuses...

So everybody dwelling in financial markets was happy thinking they were making money and everything is going up (isn't it great how everybody can make money at the same time in the financial sector, wow!), the financial guys were being looked up to by everybody else and were almost saying "I am a genius, pay attention to what I say" and had these fun nicknames like Ace. Who cares if some pieces of paper have strange things written on them. But still, after a while some people got edgy about those pieces of paper.

And in the midst of these events you have Lehman Brothers, Bear Sterns and all the rest of these "bankers" with leverages of 35 times and even more...think of it, if a company with 35 times leverage has assets of 300, they only have equity of 8 - less than 3% (2,8%), they can only guarantee 8 in 300. The rest is some kind of debt they owe somebody.... So let's say you hold some kind of debt against Bear Sterns and you start considering that if they have more than 2,8% in those strange pieces of paper that people wrote and are now afraid of and they probably have a lot more...than the piece of paper you have against Bear Sterns starts looking mighty strange too and you better get rid of that and sell to someone else real quick.

Nobody remembers that this awesome leverage of 35x or more was making HUGE AMOUNTS OF MONEY for them when everything was bullish as they generally have been for the last 80 years.

We simple people from Main Street know that making money with 35x leverage in a bullish market is very very easy. We don't do that because we believe (incorrectly) that we will be accountable for our actions like everybody else (except the financial sector guys and some politicians)

So Lehman Brothers and Bear Sterns failed because they were leveraged immensly and the quality of their assets was not so good, the people who held their debt were correctly afraid of them. And you now what, the Bear Sterns people even got 10 cents on the dollar out of their shares...lucky, they should have got zero because that was what it was worth since probably they had more than 3% of strange loans on their books...but who could really know the quality of their assets?

If they had been prudent managers and imposed a frugal administration and been very selective about the quality of their assets nobody would run against them, even in dire times, even in bear markets, even with all the financial crisis hype. They would not run against them. Simply because...

Adam Smith wrote:

"The credit of a frugal and thriving man increases much faster than his stock."

An Inquiry into the Nature and Causes of the Wealth of Nations

http://www.gutenberg.org/dirs/etext02/wltnt11.txt

Their is so much truth in this statement, but in bullish markets these kind of chicken soup truths are quickly forgotten and high "earning" sub prime debt is so tempting...and then the US Treasury and the American people are their to pick up the pieces when things go south, those nice lads, don't worry about tommorrow, pack your golden parachute and go to work whistling.

So Mr Greenberg is correct in saying that

"The Investment Bank model is over"

Of course, how can somebody imprudently leverage 35 times his own capital and think all is well? To do it and survive the bears and the bulls the person would have to be very frugal, very selective, very carefull on what assets she chose, would have to be what you would expect from a true banker. But these prudent, frugal, lucid risk managers dont seem to get much credit around wall st.

It truly amazes me that Mr Greensberg is perplexed by the fact that the investment banks as he knows them are not viable in bearish markets. I mean, the guy has 60+ years in Wall Street, isn't that obvious?

How about those derivatives Mr. Greenberg...how many times your equity can you lose with those if things go south?

His only regret is that "The employees at Bear Sterns will not get their bonuses and bonuses", poor things...maybe they should have been better managers?

The public, we guys from Main Street who pay the taxes and make those nice things the financial sector guys own, will not be convinced that this is not a bailout because it smells like a bailout, looks like a bailout and walks like a bailout. After all, they say, the financial sector is the heart of the economy so we that are the limbs will also wither away and die if the heart is not saved, e.g., bailed out. These almost exact same words have been used to impose hardships and buy the upper class immunity from their mistakes since Roman Times...But of course, in the Roman Republic, if you failed your duty it was expected that you would fall on your sword. No more, no less.

In the end of the day, after "confidence is restored" (the financial sector has finished being rescued), what is really serious is the double moral standard that this bailout reinforces in the United States and in the other developed nations, if you are big and fail, you get a golden parachute, the hardships you suffer are minimal, you call it systemic, you get to keep your money, your place in society, everything is OK. If you are little and fail, you truly fail, you get no parachute, you utilise all your equity to try to avert such tragedy, you are socially and financially destroyed, you lose.

frony  10/27/2008 04:50 AM Report

Unbelievable, sad and annoying!... all is going wrong in the financial sector because of the media mr Greenberg? really?...

RON  10/26/2008 06:34 PM Report

That is right Rick and who are the ones historically known to have unbriddled selfishness and greed!!????

and message approved by sock puppet for the hoped for preservation of fiscal, monetary and economic sanity. FAT CHANCE! Beating a dead pachyderm here because it is too big to continually ignore. $60 trillion too big ($200,000/capita)! This ignored Achil  10/26/2008 06:20 PM Report

.

King  10/25/2008 11:40 PM Report

I feel bad for Greenberg. If you did watch his 2004 Charlie Rose interview. Ace Greenberg mentioned he hired people with a degree of PSD (Poor, Smart, and Determined to get rich). No wonder Bear Stearn went down in this 2008 financial crisis. All those PSD guys whom he hired destroyed his company.

the real Preston  10/25/2008 02:08 PM Report

Comment by Preston?... Nice try. But I don't think so... ACE!

Preston  10/25/2008 01:45 PM Report

Oh, did I mention I like puppies. Yes I do. Especially ones that grow up to be skiddish Demon Dogs with big fangs that like to BITE. BITE! BITE! BITE!

Ace Prescott  10/25/2008 01:34 PM Report

Aw yes Charlie, the court of public opinion. "RUMORS"... not gonna do it. not gonna do it. wouldn't be prudent at this... "juncture".

His Lawyer  10/25/2008 01:21 PM Report

What about "perverse incentives"... perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives, huh huh huh,... "perverse incentives" perverse incentives perverse incentives perverse incentives perverse incentives perverse incentives.

Preston  10/25/2008 09:47 AM Report

I'm thinkin' Napoleon complex. We've all had to work with them shortys... I got fired once because I told one of them to stand on a bucket and kiss my ass.

web worker  10/24/2008 10:58 PM Report

True face of evil. These are the people - true enemy of capitalism and free market - not people in caves.

Doofis down the street  10/24/2008 06:46 AM Report

I won't be trick or treating at his house this year. Last year I went as Austin Powers and he threatened to kill me. And he wasn't kidding!... I asked him why? Because of my costume?! He said no, he said because you're 44!

the Doofis down the street  10/24/2008 06:38 AM Report

I wonder how much he'll pay me to clean up his dog shit?

gabriel Collett  10/24/2008 02:53 AM Report

Bear Stearns was the only credible institution on the Street

tim  10/24/2008 02:25 AM Report

I don't know a lot about what is happenning in the financial markets. The global financial system is so complex and forever evolving making it hard for blue collar workers, like myself, to understand. Despite my ignorance, I was impressed by Mr. Greenberg because the only people that he faulted for this mess was the media. The other players in this debacle he left unnammed and I thought that was very noble of him.

TABS  10/24/2008 01:40 AM Report

America asked the Fortune Teller, "Tell me my future?" The Fortune Teller replied, "Your future is all used up!"

Bill Ender  10/24/2008 01:09 AM Report

Very disappointing interview with Greenberg. But not at all surprising. He looks and acts like a hybrid of Dr. Evil and Dr. No. The epitome of the dark side of capitalism.

Randy  10/24/2008 12:31 AM Report

If it makes any of you folks feel better Greenberg is short, fat and rather ugly. He has probably been that way from the time he was born. All the money in the world couldn't change it. Take solace.

RON  10/23/2008 11:59 PM Report

it's interesting they delete my comments because i tell the truth about these criminals. the stock market is the biggest scam of the history of mankind and still people believe into it. It's just Las Vegas in Manhatten and is run by the same gang of crimials. You are so naive that you think this whole thing is real. it's just an illusion but the more real it looks more people believe in it just like magic....

Preston  10/23/2008 11:47 PM Report

I'd like to see the mounted heads of all the exotic animals he's killed. I wonder how many he caught in the wife's bedroom?

Preston  10/23/2008 11:47 PM Report

Now leave little ron alone, he doesn't see dead people, he just wants you and me to vote for them.

Sharon DeLany  10/23/2008 11:44 PM Report

This was the most one-sided "conversation" I have ever seen. Charlie, why did you bother having this worm on your show? You never asked him one question that was on my mind? Where did these so called rumors originate from? And you want me to believe rumors led to the Bear's downfall? If at all true, is it a conspiracy tied to our national elections by some little wimps in Congress led by the likes of Barney Frank? Why was Mr. Greenberg so happy and smiling? Could it be his gross bailout salary? As the saying goes, he is smiling all the way to the bank!! His lack of remorse and did nothing wrong attitude is appalling, especially after weasling out of any questions pertaining to responsiblity. If the American people had any courage, we would rise up and have another revolution, throw all the bums out and set up guilliotines.

Dick  10/23/2008 10:29 PM Report

The interview with Alan Greenberg was somewhat of a joke. He wouldn't answer the important question asked by Charlie: why did Bear Stearns collapse?

Charlie: Get someone else who really knows what happened there to answer this question without any reservations. If the guys running the company were crooks, get that information from someone not afraid to tell us.

sock puppet  10/23/2008 09:45 PM Report

Greenspan's doing his double-speak on national news. His ivy league ass is being exposed for the pandering no-regulation set-up of the common man these free-market laissez faire capitalists love to exploit. It took him ages and repeated quizzing for him to finally admit his 'ideology' (his favorite word) was flawed. He couldn't admit that housing prices wouldn't go up forever. As an economist did he cut the class on tulip speculation? But he didn't know. Well crap what were the big bucks WE paid him for all those years - and still with an obscene pension. Hell I didn't know either. Is my check in the mail?

Jon Brooks  10/23/2008 09:08 PM Report

Sadly, on the transparency-opacity scale, Mr. Greenberg gets a low score for transparency. Just another example of why Wall Street's super-wealthy will continue to exert undue leverage (regardless of the ratios) over the lives of decent, hard working citizens. Philanthropist? If the super-wealthy didn't exploit the real wealth generated by honest workers on Main Street, there would be less need for self-righteous philanthropists. Mr. Greenberg is a tragic figure and role model for the failure of his worldview of excess. And the real tragedy for all of us is Mr. Greengerg's inability to show remorse, the first step necessary in the rehabilitation process. Shame on you Mr. Rose for enabling Mr. Greenberg's denials when so many are suffering from the deeds of Mr. Greenberg and his associates. Even if we assume best intentions, the consequences remain the same: needless pain and suffering for those of lesser fortunes.

Preston  10/23/2008 07:14 PM Report

Jeffry Skilling, how do like the looks of your new roommate?

Preston  10/23/2008 07:07 PM Report

He looked pretty smug and arrogant, and way too comfortable... And he had his hands in EVERYTHING. Was he in Enron too?

Shaft  10/23/2008 05:59 PM Report

Mr. Greenberg did not answer many of the questions possed to him, its understandable for a man of his stature not to divulge too deep into the case, which has not been resolved yet. However, if he has this many "fifth amandment" why did he agree to come in for a conversation. Anyone comeing for a conversation should be free and accessible to the audience, personally I expected a lot more but got very little. Mr. Rose, I would say this was not one the best conversations you have'd in a while.

Temel  10/23/2008 05:50 PM Report

Mr. Greenberg states that last week the credit default swap (CDS) that was worth 9 cents were fully paid by the insurers.

What he did not mention that the other 91 cents on the dollar were paid by the US Treasury with the loans to the banks and the insurance companies.

What will happen when 60 plus TRILLION CDS's will come due? Will the Treasury have 54 TRILLION dollars to spare?

Lauren Deutsch  10/23/2008 05:41 PM Report

Who knows what might move us deeper into understanding of what it means to be human.

The interview with Ace Greenberg did that for me. Mr. Rose drew him out as far as

he could go with respect and compassion as the responses indicated, including the

"no comment". We see a true "Tragic Hero" in the mannger Aristotle

detailed. I am not a financial wizard and am in awe of Mr. Rose's capacity to

interview all manner of folks on all manner of topics. Even if there were answers

beyond "no comment", the specific information would not have been useful

to me. But it was the opportunity to witness someone who was passionate and good

in his work, successful and still a human being with empathy for his family, his

colleagues (and competitors) and even dogs. If he has been "hiding" something that contributes to the downfall of others, etc. I don't know. I'm taking him at his word as a human being. I had a new sense of value to my own

life and the need to move forward.

Marilyn  10/23/2008 05:00 PM Report

...www.asolutionthatworks.com

Check it out, seems better than this endless guarantee, bailout, don't know what the f.. I'm doin' but doin' it anyway song. R.S.V.P. please?

gabriel Collett  10/23/2008 04:49 PM Report

Ace in the hole could not save Wall Streets best bond, Bear Stearns

gabriel Collett  10/23/2008 04:48 PM Report

Bear Stearns was the only credible institution on the Street

failin'palin  10/23/2008 04:28 PM Report

So they let ron & preston use the

computer in the group home, eh? You're real

talkshow tough guys and human eggfarts.

sock puppet  10/23/2008 04:14 PM Report

ERN - For ACE to assert that 'this too shall pass and quickly' is buying-the-bit to prop confidence - credibly or not. What else could he say? The key pachyderm the wise-guys keep avoiding is the CDSs you mentioned. If the NET outstanding is the advertised $60 trillion, then the sky has already fallen. We're just awaiting CNBC or Rush Limbaugh to tell us. This nut is too large to honor (other than in its breach). So save your confederate money, as the greenback will be wallpaper. They can't print it fast enough. $0.7 trillion is a drop in the bucket. Dishonoring the CDSs, or debasing the currency to a banana republic status will take decades to centuries to recoup. Stock in the booze before prices skyrocket.

TABS  10/23/2008 03:31 PM Report

The 2 Greenberg's

..................................................................................................... ...............................................................

Hank Greenberg of AIG was outa the picture at AIG when a lot of their CDS stuff was being manufactured. He says, "He wouldnt ahh takin the risk as it was too great." That might be self serving but give him a pass, cause he was a kid of the Depression.

..................................................................................................... ....................................................................

Ace Greenberg, had stepped down as CEO and Chairman BUT was on the Executive Committee. Close enough to know and effect the outcome, if he so chose. He too is a kid of the Depression. Can't give him a pass as he was at the scene of the crime, even if he was just a bystander at the time. ...............It is also very likely that Mr Greenberg's assertion that the economy will rebound very quickly is a very likely scenario

Marilyn  10/23/2008 03:28 PM Report

Bees get "Colony Collapse Disorder". We get "Human Infestation Collapse Disorder"?

PS  10/23/2008 03:27 PM Report

When asked what he has learned form this crisis Greenberg easily passes the blame on the Rating agencies rather than accept he also failed. After working on Wall st for 30 years if he never knew the truth about rating agency then he making a fool of himself.

Greenberg also believe the bailout was for the Main St and not for Wall st. If Fed would have not backed the Bear debt he would have not landed into this job at Chase. Taxpayers helped him to get this job but he cannot see this.

Charlie never asked the single question about the executive compensation. I cannot think how you can leave that question in today’s environment.

sock puppet  10/23/2008 03:11 PM Report

Look at this guy's pic. Would you buy a used car from him?

sock puppet  10/23/2008 03:02 PM Report

Ace (hole?) shouldn't have consented to the (non)conversation knowing he had legal constraints. Merely says he's vain-glorious to a fault - among others such as blaming others (rumors and shorters of Bear-Stearns?) for his own overreaching greed - along with the madding financial wise-guy crowd. They all need investigating in turn by the FBI, SEC, FRB, CIA, NRA, PTA ++++ . Starting with the Godfather Paulson.

Shalom Freedman  10/23/2008 02:45 PM Report

This was interesting to a point. The point was when Charlie Rose wanted Ace Greenberg to speak about what really happened at 'Bear Stearns' and Greenberg for his own reasons, among them legal ones, would not do so. Greenberg appeared to be a straightforward, honest person who also has a lot of good- will towards people in his own business, and towards America in general. I do not know if he is right, but it was refreshing to hear someone who is optimistic and believes a turnaround will come sooner than expected.

Rick Crocker  10/23/2008 01:11 PM Report

Never mind "leveraging" ....... that's just a symptom.

The real cause of this fiasco is personal unbridled greed.

joe six pack  10/23/2008 11:52 AM Report

do what you love to do!!?? of course if you scammer and like to steal from people you go to wall street and only if you are connected. criminals......they should go to jail let's see if they like that one.....

Preston  10/23/2008 10:16 AM Report

I'm not for or against the bailout. That's for people smarter than me to figure out. I'm pissed-off about what CAUSED the NEED for a "BAILOUT". And the LONGER it takes to WORK, the more ENRAGED I get... To think there's BANKERS sitting on a pile of money and not doing what they're supposed to do. Makes me want to kick RON'S ASS!

Facundo  10/23/2008 09:59 AM Report

Once again, we hear the derrogative attitude toward people who were not in favor of the bailout. This seems to be a leitmotif of the Charlie Rose program. It seems that your guess has a problem with the term bailout, but in any case, this is not about semantics, but about 700,000,000 million dollars and counting.

As for his comment about Buffet, he failed to mentioned that until recently, Mr. Buffet stayed awas from investment banks. In any case, he failed to mention anything ,except that rumors destroyed his company, and that he has abook out soon. Can't wait. Facundo.

Tony  10/23/2008 07:44 AM Report

Hey Ron - Whats with the racist remarks - when a Christian/Protestant steals your money - I guess your OK with that. Seems to me crooks are crooks no matter what Religion they pretend to belong to. PS I'm NOT A JEW IN CASE YOU WERE WONDERING.

Preston  10/23/2008 06:41 AM Report

Dobermans are his favorite breed because he's got alot to be paranoid about. O.J. might come looking for his shit. That HE stole.

dig  10/23/2008 02:44 AM Report

More enlightening than I suspect he imagined. Greenberg brazenly expressed concern for the people who lost jobs at Lehman. Not even a thought about the millions of jobs that will be lost as a result of the criminal behavior by his ilk on "The Street".

They must breathe different, rarified air than us schmucks in real America.

Rod Nordberg  10/23/2008 01:41 AM Report

Another wasted hour!

A ridiculous lovefest of powderpuff questions to a greedy, selfish criminal who responded with selfl-serving lies and evasions.

Gamblers who don't cover their debts are welchers.

Chris Baker  10/23/2008 01:24 AM Report

PS: This interview was very unusual because Greenburg is undoubtedly the subject of litigation. He deserves credit for coming on the program.