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It's A Deal

By Tom Granahan, IDD Magazine

November 14, 2007

What Crisis?

Some of us from IDD recently had the pleasure of sitting down with Thomas Lee, he of private equity fame, for a brief chat. It was an enlightening conversation given the current circumstances with which the financial world is grappling.

"Unconcerned" would be too strong of a word, but the buyout specialist was not at all prepared to say that the happenings in the credit market and on Wall Street were about to drive the global economy into the poorhouse. Indeed, in discussing the disorder that has found its way on to Wall Street, he described the credit crisis as "what might or might not be a credit crisis."

It's always remarkable to see how different folks come at these problems, especially those with the reputation of Lee. Sure, maybe he's just talking up his book, but this didn't appear to be a man who's losing sleep about staggering write-downs among bulge-bracket banks. (See related story.) It's nice to know that not everyone wakes up in the middle of the night screaming, "Level 3 assets! Level 3 assets!"

Meanwhile, Lee's comments came on the same day that an analyst at RBS opined that, when it's all said and done, the tally of worldwide losses will resemble something between $250 billion and $500 billion. One of my first reactions to that wide view was to chuckle at the quarter-trillion-dollar leeway this fella gave himself, but then it hit me: That's precisely what this whole problem is all about.

Maybe the end result will be write-downs of $100 billion. Or $250 billion. Or a trillion. Who knows? It's an overused expression, but to say Wall Street dislikes uncertainty is a fact. And it's not much consolation that the only certainty now is the uncertainty.

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Tom Granahan

Tom Granahan is the Editor of IDD. He has more than 15 years of financial-journalism experience, having written about the stock market for Dow Jones Newswires and The Wall Street Journal for several years. He also supervised the Newswires' U.S. bureaus, and was the founding editor of Dow Jones Market Talk, which some consider to be one of the earliest forms of financial-news blogging. He graduated with a BA in journalism from Temple University in his hometown of Philadelphia.

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