It’s not uncommon for Wall Street to be criticized, but it’s pretty rare for the criticism to come from a market insider.
Yet Peter Cohan, founder of a tech-oriented investment bank and long-time Wall Streeter, now advocates closing the U.S. financial markets for good – because they are abject failures at what they are supposed to do.
“Here’s a radical idea: Let’s close down the capital markets because they’ve lost their credibility,” Cohan told Bull’s Eye.
“Financial markets are based on the concept of credit, which derives from the Latin – credere – to believe,” he said.
“To put my money in a bank, I need to believe that I will be able to get the money out whenever I want it; otherwise, I am better off holding the money myself; the same can be said of money lenders. To buy an insurance policy, I need to believe that the insurance company will pay my claims; otherwise, I am better off taking my own chances.
“To buy stock, I need to believe there is a reasonably good chance that the value of that stock will go up; otherwise I should leave it in a money market fund. The simple fact is that the financial markets have shredded the fabric of trust on which their continued survival depends.”
Granted, Cohan doesn’t really expect the banks, brokerages and insurance firms to shut down. But he would like to see some major changes in how Wall Street operates.
“Before investing, institutions would analyze risks and opportunities as if their own money was at risk, rather than earning fees by managing other peoples’ money,” he said of his utopia.
Global Crossing missed the boat
Hugely indebted communications carrier Global Crossing, Inc. filed for protection from its creditors last month, but remnants of its former high-flying attitude remain on this billboard above the Amtrak exit behind Madison Square Garden.
“Every network says they’re fast. Wanna Race?” the bankrupt company asks in the ad. “Global network, global service, global solutions. How big business does business,” the small print reads.
Apparently Global Crossing wasn’t fast enough.
The former Wall Street darling’s shares once soared as high as $61 in the spring of 2000. They are worthless now. And new class action lawsuits against the firm alleging false and misleading statements and insider selling to the tune of $149 million were filed on Friday.
Based in sultry Hamilton, Bermuda, the failed global telecom giant with fiber-optic networks in 27 countries and 200 major cities, now has investigators from the Securities and Exchange Commission peeking into their books and lawmakers have threatened a Congressional inquiry of their accounting practices.
Taken on the face value of its listed assets of $22.4 billion, the Global Crossing bankruptcy ranks as the biggest bankruptcy filing in the communications business in more than 20 years, according to BankRuptcyData.com.
That’s a lot of dough – leaving the company’s fourth CEO in two years, John Legere, and founder and Chairman Gary Winnick with a load of egg on their face.
Still want to race?
Brit words that we don’t get
We all know the British are, well, er, different.
They call sweaters “jumpers,” use the term “rubbers” for an eraser and a sidewalk is referred to as “pavement.”
However, Bull’s Eye spy Lisa Marsh wonders if there’s a new term being coined by hot British fashion designer Matthew Williamson.
A press release distributed by DuPont, which sponsored Williamson’s fashion show last week at Mercedes-Benz Fashion Week here, referred to specific items that were being designed with DuPont’s Tactel and Lycra. “Trousers, jeans, knit tops and s**ts,” went the list.
Oops.
Not everyone loves Jack
Jack Welch has won critical acclaim and best-seller status for his recent book, “Jack: Straight from the gut,” about his years as CEO of General Electric.
But not everybody likes the book.
“As someone who has served as chairman of a publicly-traded company, I had a considerable amount of respect for Jack Welch before I read this book,” posted one reader from Needham, Mass. on Amazon.com’s reader review site.
“Upon reading it and learning something of his personality, I discovered that he seems like a profoundly insecure, self-absorbed little man. Talk about a vaccuous [sic] personality!”
Monkey picks top 10 law schools
Even a chimp can pick the country’s top law schools. At least that’s what JD Jungle magazine says in its latest issue.
While the annual law-school rankings published by U.S. News & World Report are widely recognized as the industry bible, JD Jungle offers a compelling alternative ranking system of its own: Let a chimp decide.
But JD Jungle isn’t talking about any old chimp. It’s talking about Chippy, a trained seven-year-old monkey from New Jersey that has already captured the media spotlight for his analytic talents. He ranked videos for MTV Total Request Live, made presidential election predictions for now-defunct Brill’s Content and even made an appearance on “Saturday Night Live.”
Chippy selected his top 10 schools by pointing at 50 colored-paper cards containing the names of different law schools, picking them up, licking them, chewing on them or putting them up his nose.
Oddly enough, Chippy’s top 10 list didn’t quite match up with the U.S. News rankings. Yale, Stanford and Harvard – U.S. News’ top three – didn’t even make the cut.
But Chippy’s credibility may be shot. JD Jungle also asked Chippy to pick the biggest party school. His choice: Yale.