Mark McHugh

Yeah, It’s Definitely Morgan Stanley…

In Open Thread on Wednesday, October 5, 2011 at 8:31 am

Last time, I pointed out the Universe is signaling another Lehman-esque event in the very near future, and I wasn’t sure what that event was.  Now I am.

It’s Morgan Stanley.

CNBC’s repeated denials confirm this (thanks Cramer & other sock puppets!)

I hope to put together more soon (but don’t count on it).



Wall Street’s biggest charity case.

August 22, 2011 – Bloomberg reports that Morgan Stanley received $107B in bailouts from the Fed

Morgan Stanley, facing a crisis of confidence after the fall of Lehman Brothers Holdings Inc., got a $9 billion injection from Japanese bank Mitsubishi UFJ Financial Group Inc. and agreed to take a $10 billion bailout from the U.S. Treasury to shore up capital. As hedge-fund customers pulled funds out of the New York-based firm, it plugged the hole with $107.3 billion of secret loans from the Federal Reserve’s Primary Dealer Credit Facility and Term Securities Lending Facility, set up earlier in the year to supply brokerage firms with emergency financing.

Morgan Stanley was the biggest Fed charity case in 2008 and nobody knew it for three years.  See here and here.


Pursing other interest?

September 15, 2011 –  NYT’s Susanne Craig (remember that name) reports that Morgan Stanley Chairman, John Mack has announced plans to step down.  Unless this is your first week investing, you know that a Chairman stepping down is always a red flag, usually because they’ve trainwrecked the company, or put their dick somewhere they shouldn’t have.  Of course those angles were completely unexplored by Ms. Craig, who chooses instead to focus on Mack’s upcoming book (on, get this, “leaders”) and his role as an economic advisor to a presidential candidate no one’s ever even heard of. 

1.76 Trillion in OTC Forex contracts

September 24, 2011 – In this article, based on the OCC’s quarterly report on derivatives activity Zerohedge observed:

Of particular note is that while virtually every single bank has a preponderance of its derivative exposure in the form of plain vanilla IR swaps (on average accounting for more than 80% of total), Morgan Stanley, and specifically its Utah-based commercial bank Morgan Stanley Bank NA, has almost exclusively all of its exposure tied in with the far riskier FX contracts, or 98.3% of the total $1.793 trillion. For a bank with no deposit buffer, and which has massive exposure to European banks regardless of how hard management and various other banks scramble to defend Morgan Stanley, the fact that it has such an abnormal amount of exposure (but, but, it is “bilaterally netted” we can just hear Dick Bove screaming on Monday) to the ridiculously volatile FX space should perhaps raise some further eyebrows…

Here’s something else noteworthy from the OCC report:

The Morgan Stanley holding company is third in total notional amount derivatives contracts with $56.4T, yet Morgan is sixth in total assets with $830.7B.  Their ratio of derivatives to assets is 68, the highest in the group (Goldman is a distant second at 57).  Hmmmm. 

(more to come…)



G’head.  Here’s what I got this morning:



 Again, unless you just opened your E-trade account yesterday, you should know that large banks are far more interested in quelling  truths than rumors. 


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