Comments on: CDS conspiracy theory du jour, Gretchen Morgenson edition

By: LCWDC

LCWDC — Thu, 09 Feb 2012 16:23:29 +0000

Gretchen Morgenson is an idiot, pure and simple. She exhibits, at best, a rudimentary understanding of the things she writes about, but in this climate of “Wall Street is Evil” she’s made a name for herself (and a nice living) inventing scandals and imagining misconduct. I can’t read her anymore – I’m a die-hard liberal and I’m really close to canceling my NY Times subscription just so I won’t have to see her byline anymore.

By: Danny_Black

Danny_Black — Thu, 24 Nov 2011 07:13:59 +0000

alea, she gets these details wrong so often one has to wonder if it is stupidity, ignorance, carelessness or whether she is actively fabricating the stories.

By: realist50

realist50 — Mon, 21 Nov 2011 20:37:42 +0000

I agree that it’s unseemly if a member of an ISDA committee is browbeating parties to accept a “voluntary” restructuring by making a veiled threat that CDS may not be triggered. The broader question, however, is then whether any employee of a large financial institution should be on these committees. After all, in any sizable default one it’s essentially inevitable that a large money center bank or investment bank is going to have some financial interest, whether a long or short position.

By: ARJTurgot2

ARJTurgot2 — Mon, 21 Nov 2011 20:20:00 +0000

Face it Felix, Gretchen is much more pleasant to watch on video than you.

By: IanFraser

IanFraser — Mon, 21 Nov 2011 17:15:17 +0000

Thanks @alea_

By: alea

alea — Mon, 21 Nov 2011 15:45:04 +0000

It has been widely reported that the BNP contract with the greek govt. was ended in late october, (you would never guess that from the Morgenson piece). (I posted a link on twitter about this)
In addition, BNP has no material net position in greek CDS and no incentive either way for or against a default, also BNP has taken a large hit reflecting a 60% haircut on its greek bond holdings (more than €2.5 bln) , all of this is public knowledge but again none of this is mentioned by Morgenson.
And Poor “Belle Yang” is allegedly sitting on the ISDA DC, big deal! BNP doesn’t run ISDA, it’s certainly much better for investors to hear about what could happen from a DC member rather than from some ultracrepidarian at the NYT.

By: IanFraser

IanFraser — Mon, 21 Nov 2011 14:30:39 +0000

Because she sits on the IDSA “determinations committee” that will decide what constitutes a “credit event” in both Greece and elsewhere in Europe, at the same time as being part of the BNP Paribas team appointed by the Greek government to help persuade investors to accept circa 50% haircuts on their bonds. A third conflict arises since BNP Paribas is, I believe, one of the biggest holders of Greek government debt, with about €5bn worth. Presumably in role 1, Yang has a vested interest in avoiding a “credit event”, as she does in role 2 (though for different reasons), but in role 3?
see also:- http://wallstreetpit.com/86248-how-do-yo u-cover-up-your-failure-the-greek-case

By: ottorock

ottorock — Mon, 21 Nov 2011 10:24:28 +0000

I have read your review of Morgenson’s piece and, on due consideration, believe that you didn’t like it, Felix.

By: prk11

prk11 — Mon, 21 Nov 2011 10:06:33 +0000

As a “highly sophisticated player”, I find it highly disturbing that a member of a supposedly impartial ISDA committee is using her position to influence investors’ actions, whatever her motivations may be. Whether this belongs on the front page of the NYT is arguable, but Morgenson deserves credit for breaking the news. Will be interesting how the ISDA blog spins this.

By: FelixSalmon

FelixSalmon — Mon, 21 Nov 2011 04:56:30 +0000

@IanFraser — what exactly is Yang’s conflict here? I have to say I don’t see it.

By: gsignoret

gsignoret — Mon, 21 Nov 2011 04:50:14 +0000

You’re my fave, my hero, Felix, but this line:

“And their plight is certainly not of interest to the NYT’s readership as a whole.”

is a strange argument, one you don’t need, and one that you can’t support.

Can you defend every thing you’ve published in the past year (month, week) on the basis of its being of interest to Reuters’ readership as a whole?

Should you be asked to?

How many dissidents have been muzzled with language like that?

I’m not defending Gretchen’s article (I don’t have the competence to judget it, and I highly respect yours), but this final phrase undermines you, by painting you as emotional. Wanting to hurt.

This is, however, a rare blip in your brilliant career. Your output is usually informative and entertaining. Exceedingly well written.

Thanks for it all.

By: DanAllen

DanAllen — Mon, 21 Nov 2011 01:17:06 +0000

As part of the swap, the new 30 year bonds will no longer be held under Greek law. That needs to be noted both by Morgenstern and Reuters.

By: datascientist

datascientist — Sun, 20 Nov 2011 22:58:38 +0000

I basically stopped reading her, for exactly the reasons/examples you have cited. With the bully pulpit she has at the NYT, I could never understand why she was often sloppy, and at time just flat out wrong.

By: Curmudgeonly

Curmudgeonly — Sun, 20 Nov 2011 22:08:08 +0000

Perhaps the bondholders should be aware there’s a chance of Greece changing the law, and shenanigans at ISDA.

However, for a banker and ISDA person to tell bondholders if they don’t take the haircut, there will be shenanigans at ISDA seems a mite unseemly.

At a minimum, having been engaged by Greece to deliver this message, BNP should have to be recused from ISDA proceedings regarding Greece.

By: IanFraser

IanFraser — Sun, 20 Nov 2011 21:45:59 +0000

Felix, I think you’re being a bit harsh. There are flaws in Gretchen Morgenson’s piece but, inter alia, she has exposed a massive conflict of interest in the dual role of Belle Yang.