Just 12 months ago, the investment banking landscape was dominated by 5 mammoth banks: Morgan Stanley, Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns.
Then Bear wound up when its stocks plunged from about $60 a piece to less than 10% of that over one weekend.
Then poor Lehman had to do the same when nobody wanted anything to do with its rotting debt obligations.
On the same day, Merrill got acquired by Bank of America.
Now, Morgan Stanley's deciding to sell a 49% stake to China Investment Corp.
Goldman, when's your turn? Banking at the big 5 isn't so cool anymore. Not when 4 of the 5 are making headlines like that. And all because of what? Cos the lenders decided that it would be alright to extend loans to the defaulters, the unemployed and the irresponsible. And investment bankers, being the innovative people that they are, decided to slice and dice those loans beyond recognition and sell them to investors who didn't understand, but didn't want to admit.
Life was much simpler then. When all you had were stocks, bonds and currencies. Now you have a plethora of abbreviations - CDOs, CDSs, CMOs, ABSs, MBSs, CLOs, CMBSs, CBOs. They call them structured products. I'm pretty sure I'm not alone when I say that 'structure' is nothing more than a euphemism for 'zenith of complexity'.
Oh well. Let's just hope that things simmer down by end-2009. I would like to have a job when I graduate, you see.
Then Bear wound up when its stocks plunged from about $60 a piece to less than 10% of that over one weekend.
Then poor Lehman had to do the same when nobody wanted anything to do with its rotting debt obligations.
On the same day, Merrill got acquired by Bank of America.
Now, Morgan Stanley's deciding to sell a 49% stake to China Investment Corp.
Goldman, when's your turn? Banking at the big 5 isn't so cool anymore. Not when 4 of the 5 are making headlines like that. And all because of what? Cos the lenders decided that it would be alright to extend loans to the defaulters, the unemployed and the irresponsible. And investment bankers, being the innovative people that they are, decided to slice and dice those loans beyond recognition and sell them to investors who didn't understand, but didn't want to admit.
Life was much simpler then. When all you had were stocks, bonds and currencies. Now you have a plethora of abbreviations - CDOs, CDSs, CMOs, ABSs, MBSs, CLOs, CMBSs, CBOs. They call them structured products. I'm pretty sure I'm not alone when I say that 'structure' is nothing more than a euphemism for 'zenith of complexity'.
Oh well. Let's just hope that things simmer down by end-2009. I would like to have a job when I graduate, you see.
