Taking Stock of Bonds

October 28, 2008

Gallows Humor

When the stock indices plummet at a dizzying speed, credit market spreads widen and finance markets freeze up, there is little left but to grin and bear it.

On a recent visit to the hectic NYSE trading floor, IDD noticed that brokers with one firm on the floor played the techno-styled theme song from the movie "Silence of The Lambs" (you know, the scene where the serial killer dances alone in his bedroom) on their computers some 30 minutes before the market's close. The DJIA lost several hundred points that day. The market was being mauled and it was real messy. Some floor brokers just shook their heads on disbelief. Others tried to make light of it.

Then there is the one being traded among the folks at one of the US housing agencies that reveals something about their political leanings. The weapons of mass destruction the current US administration was looking for in Iraq have been found: the subprime mortgage market.

There is even a bit of levity showing up in headlines of Wall Street analyst reports to investors. Consider Bank of America's Oct. 27 note to investors about stock price moves, entitled "In the Midnight Hour," a reference to the R&B hit by Wilson Pickett, while S&P that same day had entitled its weekly market analysis "Free Fallin," a nod to Tom Petty's hit song.

Recently the dry wit was evident in an observation made by Lewis Ranieri at an event sponsored by Harvard University. In his comments, the man credited by many for creating the securitization market remarked that TARP, the acronym for the US government's bailout plan, may have been a poor choice. After all, as he noted to an audience that included senior managers at many US leading homebuilders, "The tarp is something, as a builder knows, you throw over a lot of stuff that is unsightly."