Denial

So, slow weekend in the financial sector, huh?

OK so my pledge to you is that on Tuesday I am going to get it up and write about some fucking poker in this space for the first time in a week. It has been impossible for me to find that within me since this whole miserable mess began to unfold a week ago today, but on Tuesday I plan to force myself to change that and give you guys what you really come here to read about every day -- poker.

For now, suffice it to say that I am hurting. For the sixth straight day, you can expect me to be good n drunk already by the time I lurch off the commuter train at my new suburban home. I can't really deal with reality without it. In a way, today's shocking bankruptcy declaration by Lehman Brothers will be a calming influence on my life and really on the lives of many of the people more directly involved as employees in the company. I need something else to focus on all day while I toil away at my new job, other than the constantly-updating real-time LEH quote always ticking on my screen. Mostly downward, since I started the new job to tell the truth. I need to start focusing on helping my friends and former employees over there move on with their lives, start finding new jobs or new endeavors, be it school, a complete change of industry, whatever. And heaven forbid on my own life, imagine that.

One lasting aspect I cannot get out of my head from all this deals with Lehman assholeprickmotherfuckerhopehedies CEO Dick Fuld's raging denialism. I wrote last week about the fact that Merrill Lynch bit the bullet and sold $30 billion of troubled mortgage assets earlier this summer to Lone Star, an entity that specializes in making such purchases, for 22 cents on the dollar. And how in fact, the price was cheaper than that, because Merrill took the additional step of financing about 16 cents of those 22 cents on the dollar they received. They basically sold $30 billion of mortgages to Lone Star for $6 billion, and they lent Lone Star $5 billion of that $6 billion as it is, including giving Lone Star the right to put a significant portion of those securities back to Merrill if they price dropped significantly from current values as of the time of the sale. Many people would describe (and have described) this as selling the mortgage assets for 6 cents on the dollar, and I would not necessarily disagree with that characterization.

As I mentioned last week, ever since the day Merrill announced this major asset sale, Lehman and CEO Dickhead Fuld have been on the market, trying to sell up to $40 billion of its own troubled mortgage portfolio. But Penis Fuld would not accept less than 85-90 cents on the dollar for his portfolio, despite the precedent set by Merrill just a couple of months ago. As a result, no deal has come close to being reached, and Lehman now declares bankruptcy while holding some $60 billion of distressed mortgages on its books.

And just look at what fucking went down this weekend. Friday closed out with Bank of America being rumored to be the frontrunner to buy Lehman Brothers, which after last week's disastrous stock market performance could probably have been purchased by BofA for what? A billion dollars maybe? Less even? $500 million? Well, over the weekend BofA got its first look at Lehman's mortgage book, and what they saw was not pretty. It was so bad that by Saturday afternoon, BofA had already backed away and removed itself from its candidacy to buy Lehman, at any price. Immediately, some were speculating late on Saturday that BofA was still reeling from its horrific purchase of mortgage specialist Countrywide Financial last year, near the height of the market, and/or that BofA had capital and liquidity problems of its own, and just could not scrape together the cash to purchase Lehman Brothers in these troubled times.

Well lookie what happened. Not only did BofA have the interest and the willingness to buy a large U.S. investment bank, but they had fifty fucking billion dollars to do it. But they didn't buy Lehman, with its $60 billion of liquid shit on its books. Instead they bought Merrill, the company whose astute management bit the bullet and solid their shit for literally pennies on the dollar a few months ago. Just like I said last week, that's a guy who is a leader, someone who is willing to take the short-term hit in exchange for the long-term gain to the value of his company. Cock Fuld, on the other hand, is a jackass who let hubris blind him from doing the very thing that could have saved at least some semblance of his company from disappearing, like it now will. Friday BofA was going to buy Lehman, which they could have gotten for a billion dollars or less, and then on Sunday they instead decided it was a better value for them to spend more than 50 times as much to buy Lehman's competitor who had a horrible mortgage portfolio until a few months ago when they took their medicine and just did what they had to do to get rid of it.

Denial. Anyone familiar with substance abuse or other forms of addiction will know that this always remains step one of addicts dealing with any problem. The human condition simply predisposes us all to be tempted to just deny deny deny our problems, and they maybe will go away. But in this case, Prick Fuld's denial got him everything he would never want for himself and the company that he's been with since fucking 1969. And now the 25,000 employees whom he told to trust him in a company-wide conference call earlier this summer just found out what happens when you put your trust in the hands of a known denialist. What a sick, sick ending to one of the saddest stories in Wall Street's history.

Back tomorrow with some real life poker content. That is my pledge to you.