$$$ Banks set to cut 10-15% of staff as markets take toll on revenues [FT]

$$$ Dow Jones Up: Mission Accomplished! [Jeff Matthews]

$$$ WeatherDesk: Happy Ending [The Beach]

$$$ The only man in America who will give you a loan [WallStrip]

Barclays announced today that it "rescued" a $1.6 billion debt fund run by Cairn Capital after it was unable to raise money in the credit markets, a situation that Barclays would undoubtedly take credit for, if only creating a discredited market were something to brag about (which, in some circles, it is, just not those in which the Barclettes move). Separately, the bank, blaming the proverbial "technical breakdown," borrowed a sizeable amount of money (£1.6bn ) from the Bank of England yesterday, for the second time in two weeks.

Barclays claims that "[the bank] itself is flush with liquidity." But does its appeal that everyone "quit your bitching and leave us alone or someone's going to get hurt" (actual statement: "In these challenging times the dramatisation of such situations is of no help to markets, their members or their customers") seem a bit defensive for an organization that doesn't have a care in the world? Some think the lady doth protest too much and are demanding answers. James Harding would care to know:

Why was it just Barclays that found itself scrambling for funds? Why could Barclays not find lenders in the commercial market? And why was it that, if the Crest settlement system was to blame, other banks did not also go running to the Bank of England?

It's getting kind of late in the day and we're about to close up shop for the weekend, otherwise we'd obviously provide groundbreaking answers (and more) to all those questions. For now, we leave you with one of our own, that might actually put this thing to bed-- substance abuse? (Don't act like it's not the logical conclusion.)

Barclays Rescues $1.6 Billion Cairn Capital Debt Fund [Bloomberg]
Barclays admits borrowing hundreds of millions at Bank's emergency rate [The Guardian]
Barclays and the interbank market [Financial Times]
Transparent lack of transparency [Times Online]

The entire week has been a prelude to this morning's speech by Fed chairman Ben Bernanke. But late last night we learned that President George Bush would upstage Bernanke by announcing a new policy just an hour after the release of Bernanke's speech.

Rather than pretend we know what this all means, we're just going to open this thread up to comments from our readers. You're smarter than us anyway.

Britain's largest bank announced today that it will not be implementing a plan to make money by charging interest on graduate overdrafts, because Facebook.com asked it not to. HSBC caved after catching wind of a group on the social networking site called "Stop the Great HSBC Graduate Rip-off," whose 5,756 members requested that the financial institution *not* charge them interest, referred to the bank as a "spin machine," and encouraged friends and family to go elsewhere out of spite. (One member, Martin Deakins, posted on the group's wall: "YEAH see HSBC you cant just f**k us over as and when you feel like it." Another, Michael Dean Anderson, perhaps a mole sent by the banking giant, wrote: "You all really need to get over yourselves and just pay it back. Fucking freeloaders: hate 'em. Much love.")

The reversal marks a victory for grads who would sooner opt to have money versus not have money, and a new low for the bank (next, Goldman Sachs's GEO will slash fees from 2/20 to 0/10 to 0/0, under pressure from a group formed by a bunch of Stern kids pushing their luck). Some might also regard it as accomplishment for the Facebook family, though it disappoints us greatly to see something that was created soley for the purposes of stalking classmates and/or getting laid to be used for such constructive means. Stuff like this was never in Adidas flip-flop boy's business plan.

HSBC submits to online student protest [Times Online]
Can HSBC Really Be Just That Dumb? [myvestauk]

Who needs the best striker in the world (Thierry Henry) when the real power in English Premiership football is in getting backed by a Russian oligarch? From DealBook:

Russian mining magnate Alisher Usmanov has acquired a stake in Arsenal from David Dein, the club’s former vice-chairman and a close ally of manager Arsene Wenger. The sale of the 14.6 percent stake for 75 million pounds ($152 million) may fuel speculation that Mr Usmanov, who has made much of his fortune in the steel industry, may eventually mount a takover bid for the north London club.

English football is becoming like Battle-Bots (or one giant pissing contest) for Russian magnates, as Chelsea has been annoyingly good since Roman Abramovich bought the team in 2003.

(Pictured - The Arsenal SLR-105, a Bulgarian AK variant)

Russian Steel Magnate Buys Arsenal Stake [DealBook]

Do you agree with Forbes' list of the 100 most powerful women? Merkel is #1, fine, but Oprah below the CEO of Rite Aid (the logic here is that America's housewives need their prescription refills to tolerate the massive emotional swings required of an Oprah viewing without lighting themselves on fire)? Ruth Bader Ginsburg below the CEO of Sara Lee (deliciousness is never un-constitutional). Hillary Clinton below 'I am important in my own special and deserved way' Melinda Gates? Queen Elizabeth II at #23 (ok, we don't know if we'd put her higher or lower, but we love the fact that her occupation is "Queen"). The ghost of Nina Wang conspicuously absent from the list? No Melanie Griffith's character from "Working Girl"? No Rosie the Riveter?

Forbes' List of Most Powerful Penis-Lackers Contains Some Unexpected Surprises [Defamer]
The World's 100 Most Powerful Women [Forbes]

Baidu and Yahoo China, two of the most popular search engines in China, facilitate the country's near 100% rate of downloaded music that is stolen. That's right, almost all music downloaded in China is stolen (more proof that the Chinese are smarter than us). Other search engines in China, like Google China, don't have a built-in mp3 download tab, and are pissed that they can't gain search engine market share.

The International Federation of the Phonographic Industry (and the world of tomorrow), a consortium that includes reps from Sony BMG, Universal and Warner, is on the case, suing nearly everyone in China. The organization reportedly wins 90% of its lawsuits, but loses suits against the big boys like Baidu, which entrenches the current search engine pecking order by crippling the little guy... with slaps on the wrist. Since the averages damages awarded per lawsuit amount to $130 (yes, dollars), getting sued isn't that big of a deal to a budding search provider. The IFPI spends about $13k per case, which is a bold profit shucking initiative that only the record companies could dream up.

In other search engine news, Google and Yahoo have teamed up with Mercedes to allow each search enginge's map services to be sent to your car, if your car is a Mercedes. You know the state of auto-navigation is in trouble when car GPS systems are Google mapping a destination. The service will be available on the S-class, CL-class and entire 2008 C-class lineup.

Deaf to Music Piracy [BusinessWeek via Valleywag]
Google, Yahoo to direct your Mercedes [News.com via Valleywag]

Bush to Expand Government Role to Deal With Subprime (Bloomberg)
Well, so much for that whole 'Bush is an Austrian let the chips fall where they may' thing. The prez has established a new plan whereby the federal government will insure mortgages for delinquent, subprime borrowers, allowing them to refinance at better rates. And while they're at it, maybe they can extend the life of their mortgage to 70 years, just to get the monthly payment down to something manageable. It's almost tiresome to cry 'moral hazard' at this point, but what the heck "Moral Hazard"! Anyway, we wanted a compassionate conservative, so this is what we got.

McGraw-Hill replaces president of Standard & Poor's (Reuters)
Despite the fact that S&P has performed absolutely flawlessly during this whole credit debacle, with all blame resting on some faulty models (bad models, bad!), McGraw-Hill has decided to replace the unit's President. You might, however, be tempted to call the move window dressing, since the new president is another top S&P executive. This is not quite what's meant when they say 'change starts from within'.

Dell reports 2Q earnings jump (Thomson Financial)
Thank god for the laws of physics. Eventually things fall so hard, with so much crap hitting so many fans, that things will reverse themselves, at least a little. Over the past couple years, Dell has been hit by accounting scandals, desisting threats, terrible customer satisfaction, exploding batteries, product lameness, questions about stock buybacks, et. al. ad nauseum. So, eventually the company had to come through with a decent quarter. That they did, beating analyst estimates on the back of respectable (but by no means amazing) sales growth. Hats off.

Mexico Prepares to Allow U.S. Trucks to Cross Border (Bloomberg)
We must've been on a different planet for the past 12 years, because we were under the impression that this is what NAFTA was all about. Apparently that part was blocked. Anyway, good news for free traders and truck lovers. Now, about that privately-owned highway connecting Mexico to Canada...

$$$ I just filed a leave from work before burnout strikes. I'm [was] a banker, had been single for quite some time now and would like to unleash my other (wilder) side. Willing to try person of any background as long as you are psychologically balanced. [Craigslist]

$$$ Bin-Laden Trades [thestreet.com]

$$$ Eric Bolling Bolts CNBC's Fast Money for Fox? [The Big Picture]

Sponsored by the Financial Times.

The volatility trend continued today. The Dow Jones Industrial Average took a nosedive after the opening bell, recovered midday to the greensward and then fell right back down into the river of red. It closed down 50.56 to to 13238.73. The S&P stumbled 6.12 to 1457.64. Technology stocks did better, boosting the Nasdaq Composite. It gained a bit to close up 2.14 at 2565.30.

Share of Wall Street financial companies took a pounding. Bear Stearns, Goldman Sachs Group, Merrill Lynch and Morgan Stanley tumbled down after Lehman Brothers Holdings cut earnings forecasts for the firms.

It’s the penultimate day before the long Labor Day weekend, and volume was as light as you’d expect.
“My main question today wasn’t what I should trade. It was how I could get one of my vendors to invite me out to the Maria Sharapova match tonight,” one trader told us. We told him to get us a ticket too.

Market intelligence from people who aren’t off for Labor Day: FT Alphaville.

You know a product is failing when it loses its all important “verb replacement” status. For example, in the fledgling days of inclusive DVR cable packages, we would still say we were Tivo-ing something. Tivo’s emergence as a verb was a combination of a good product name, good marketing (for the opposite of this, see Hulu) and a rooting interest in the ingenuity of a small-ish company stealing thunder from the cable giants.

Since its methodical destruction by the cable giants (wait, you mean I don’t have to connect this awkwardly to a land line, I don’t need another box, and I don’t have to pay a large upfront fee for the box?) the fickle TV-viewing public acquiesced, and begrudgingly de-verbed Tivo. Now that the cable giants got us all hooked in on the cheap paying an extra monthly sub fee, they’re starting to raise rates accordingly, and we “DVR” our favorite shows.

Tivo is taking a hit today, down almost 10%, based on the following, from Seeking Alpha:

There are several factors at work in today’s slide. For one thing, revenue came up short of expectations - and so did guidance for the fiscal third quarter. For another, the company took an unexpected $11.2 million inventory writedown for standard definition DVRs, a casualty of its shift to a focus on high-definition DVRs. The company also suffered a net loss of 19,00 “TiVo owned” subscribers, disappointing investors who had expected to see at least a modest increase in subs.

There is some potential sunshine amidst the Tivo gloom - with the comapny's new focus on HD-DVR and a Comcast New England deal expected to start rolling out in September. For now, the bears are feeding.

It’s almost always a smart play to bet on verbs. You knew Google reached ubiquity when people started using Google as a verb, and this happened well before the IPO. Yahoo never became a verb, and is trying desperately to reposition itself in the tech space. Facebook has been annointed verb status, while leaving behind MySpace in the predicate race. Clearly the long bet is on facebook. Also – does anyone say they “Xeroxed” something still? It seems the world has quietly gone back to saying they “copy” things again.

TiVo Slides on Weak Revenue, Subscriber Losses [Seeking Alpha]

William Porter earlier this week sold nearly 5% of his shares in the International Securities Exchange, one of the leading electronic options exchanges, according to documents obtained by DealBreaker. Porter, who also founded E*Trade and sits on its board, was one of the founders of ISE. He served on the board until term limits forced him to leave recently. Although he is the third largest holder of ISE shares, the sales have not yet been disclosed.

Porter sold over 95,000 shares for around six million dollars. The average share price was near $66 dollars. Prior to selling these shares, he owned around 5.1% of the company and will likely be required to file a Schedule 13D report noting the sale with the SEC. These sales appear to bring him just below the 5% threshold for reporting to the SEC, so subsequent sales will not need to be disclosed.

The ISE is currently the subject of a takeover bid by Eurex, Deutsche Börse's derivatives arm. A spokeperson for ISE said that the company believes the transaction will close in the fourth quarter.

William Porter could not be reached for comment. The International Securities Exchange said it did not comment on trades in its shares.

Goldman, Wall Street Firms' Estimates Cut by Lehman [Bloomberg]
Bear, Lehman, Citi shares fall on Merrill downgrade [Reuters]
Downgrade Dumps Lehman [thestreet.com]
Lehman: Talking Down The Street [Forbes]
Citigroup, Lehman and Bear Stearns Downgraded [CNBC]
Lehman Drags Financials Lower [WSJ]
U.S. banks get axed [globeandmail]
Who’s afraid of the big bad banks? Everyone. [FT Alphaville]

No one is safe from infringing on Viacom's copyrights. Take this latest example, from BoingBoing:

Christopher Knight made three commercials as part of his campaign to run for a seat on the Rockingham County Board of Education. He posted them on YouTube. Viacom's VH1 ran one of the commercials on its show Web Junk 2.0, without seeking Knight's permission. Knight then posted the Web Junk 2.0 segment on YouTube. Yesterday, YouTube pulled the clip, at the request of Viacom, which said Knight was infringing on its copyright.

Infringing Viacom claims copyright infringement [BoingBoing]

If you work in structured finance, you might soon be getting fired, unlike Rick Ziwot, who voluntarily left his job. HSBC confirmed today that Ziwot will depart from his post as the bank’s global head of structured credit products, to be replaced by Jeff Jakubiak, head of structured credit products for Europe, the Middle East, Africa and Asia. Allegra Kelly will become deputy head of the structured credit products group (a title that includes a badge, plus chaps and spurs).

Think Ziwot’s exit has anything to do with fears of major losses for collateralized-debt-obligation investors affected by subprime? Think again. According to HSBC, Ziwot’s departure (and the ensuing shuffle) has nothing to do with the meltdown in the market. Rather, it had to do with “a decision by Rick Ziwot to retire after his 45th birthday, which was in July." Okay, we’ll buy. You set a deadline for yourself and you stick to it, man, you fucking stick to it. (But seriously, who among hasn’t planned to retire at 45? This sounds legit to us, no sarcasm implied.)

Structured-Products Head Is Set to Leave HSBC [WSJ]
Senior US credit banker Caplan departs RBS [Times Online]

I light up another cigarette. The sky is brilliant blue. The weather man had promised humidity leading to rain tonight. But it’s not yet noon on a late August morning, and the air is almost crisp. A slight breeze blows the smoke over my right shoulder and toward the Hudson river.

Somewhere beyond the far shore of the Hudson there are thousands of homes bought with mortgages that everyone now calls subprime and many view with terror. The phrase “subprime slime” is used but I can never tell whether it refers to the mortgages, the way they corrode other credit products, the people who bought houses with them, the people who lent them out or the folks who bought structured credit products containing them or the folks who built and sold those products.

I’m on the rooftop of a Tribeca building. The apartment just below me is owned by a money-manager who has asked me not to describe his employer too closely. I’m not even supposed to reveal whether it’s an investment bank, a hedge fund, a money manger, a mutual fund, a pension fund or something else entirely. He’s in the credit business, managing a portfolio of credit products bought with money his employer is charged with managing. I’m here because he’s promised to talk to me about commercial paper.

“It’s Hendricks, so you don’t need any vermouth,” he says. He places a martini glass in front of me. The liquid is so clear that the light barely breaks as it passes through it. A pale green slice of cucumber floats atop, clinging to the edge of the glass. “It’s summer,” he says to explain the cucumber.

The Pritzkers, who are like the Hiltons you still recognize with clothes on, sold a $1 billion stake in their Hyatt hotel chain to Goldman and Madrone Capital Partners started by Wal-Mart chairman Rob Walton.

Speculation about the fate of Hyatt has been on the rise with the chain’s ongoing restructuring plan, internal family drama, and Blackstone’s $26 billion Hilton buyout. The Hyatt restructuring has involved 53 internal mergers, expansion into China and preparations to release detailed financials.

The Pritzker domestic squabbles culminated in a $1 billion lawsuit a couple years ago in which Liesel Pritzker accused her father Robert of tapping into the trust fund. Liesel eventually won $450 million (or lost $550 million, or made normal people want to cry).

Liesel has taken the stage name “Matthews” (or mom's maiden name) for a number of screen roles (and real life), including Sara Crewe in the mid-90s classic, “A Little Princess,” which is one of Lloyd Blankfein’s favorite films, and played a vital role in getting Goldman to pull the trigger on the purchase. Scenes like this are not uncommon at 85 Broad Street:

Miss Minchin (played by a confused junior analyst): Don't tell me you still fancy yourself a princess? Child, look around you! Or better yet, look in the mirror.
Lloyd Blankfein: I am a princess. All bank CEOs are. Even if they live in tiny old attics. Even if they dress in rags, even if they aren't pretty, or smart, or young. They're still princesses. All of us. Didn't your last boss ever tell you that? Didn't he?

Actually, the entire premise of “A Little Princess” is that a batty girl (Sara Crewe) in an oppressive boarding school responds to every situation by claiming that she is a princess. A typical scene:

Random Teacher: Your dress is on fire.
Sara Crewe: I am a princess.
Random Teacher: I’m fucking serious, your dress is on fire.
Sara Crewe: All girls are princesses, even if they are burning, or freezing, or suffering from a horribly infectious rash.
Random Teacher: Stop, drop and roll bitch, our insurance doesn’t cover this.
Sara Crewe: All girls are princesses, whether they are stopping, dropping or rolling…

This has also been the Goldman response to its hedge fund’s ignominious performance (Investor: Your hedge fund is blowing up, Goldman: We’re princesses, we’re Goldman, we’re Wall Street Royalty alright! We’re PRINCESSES!”)

Pritzkers sell $1bn stake in Global Hyatt [Financial Times]

There’s a lot of bitching and moaning going on, of late, about how hedge fund mangers like James Simons and private equity giants like (OXYMORON ALERT:) Stephen Schwarzman* make too much money. But bitching and moaning on their own only go so far, which is why, every once in a while, there has to be a report that gives a little weight to the “it isn’t fair” argument that Schwarzman earned one hundred billion dollars last year and our compensation is one belly rub per post (and a scratch behind the ears for every “after the jump,” because page views = money, people).

Today’s (essentially) scientific study comes courtesy of the Institute for Policy Studies (IPS) and United for a Fair Economy. It found that in 2006, the top 20 hedge fund and private equity bosses (Simons, Cohen, Griffin, Schwarzman, Kravis, etc) earned an average of $657.5 million, versus the $29,544 average raked in by U.S. workers. This translates to the former making 22,255 times that of the latter. But, obviously, that’s not the best part. The report notes that the discrepancy between the two groups “dwarfs”—that’s a direct quote—the discrepancy between CEOs and workers (corporate execs, on average, earn a measly 365 times that of U.S. workers). Actually, no, that’s not the best part, which is the statistic that last year, the Top 20 earned more money in ten minutes than U.S. workers made the whole year. The blatantly passive aggressive subtext here is that there’s something wrong with this.

Douglas Lowenstein, president of the Private Equity Council reminds us that “Income disparity is an important issue, but studies driven by sound bites don't advance a national debate about how our nation should respond” and, personally, as people who are practically deaf when it comes to sound bites, we think he’s dead right. Hedge fund lobbyist John Gaine, of the Managed Funds Association, notes that HF compensation is “fee-based and directly attributable to…performance.” Also right. Sarah Anderson, a director at IPS, decidedly not assisting us in our quest for a hat trick, criticizes the gap, and argues that Congress ought to increase the tax on private equity firm’s earnings from 15% to 35%.

Rather disturbingly, there seems to be a growing contingent in this country that agrees with Ms. Anderson. Individuals and groups who take issue with what they subjectively regard as astronomically bloated pay. People (Ben Stein, the New York Times) who have a “problem” with the so-called tax “loophole” (which, if you take off your shades of cynicism for a moment, will see is actually just a “business model”), open only to managers, and not ordinary Americans.

Thankfully, an organization known as SHAME (Southampton Alliance for Monied Estates) has its head on its shoulders and knows that hedge fund and private equity managers aren’t just like you and I—they’re better, and should be compensated and taxed accordingly. Yesterday, SHAME, in association with Concerned Neighbors of Henry Kravis, took to the streets and demanded more tax breaks for private equity kings. Rallying around Kravis’s mansion, SHAME called on Congress to let the KKR boss and other buyout billionaires with homes in the Hamptons to keep the 15% tax they’ve long come to enjoy. SHAME sang slogans like “protect the emerging plutocracy.” SHAME told DealBook, “We’re out here to help save our local neighborhood billionaires.” SHAME passed around a petition and encouraged people to defend the rights of a contingent of people that so obviously cannot defend itself.

John Carney, discussing SHAME's motivations on the eve of the rally [CNBC]
Union takes LBO protest to Hamptons [Reuters]
Buyout Tax Debate Hits the Hamptons [DealBook]
Cash of the titans: Criticism of pay for fund execs grows [USA Today]

*I will be here—KILLING—all day.

Summer ratings are out, defined by Nielsen in this instance as the period between 5/24 and 8/22. The ratings are as mystifying as ever, showing a large contingent of people who voluntarily watch CBS programming. CBS has 5 out of the top ten most watched summer series, while FOX has 3, NBC has 2 and ABC laid a summer ratings goose-egg (people were apparently out trying to find their own McDreamy rather than watching him bed an entire hospital staff).

The real story is CBS actually having viewers. They’re out there, among us. They look just like you and me. “He seemed like a normal guy,” the neighbor’s testimonial always says, “I couldn’t tell he watched the King of Queens.”

Who watches CBS? Is it an AARP thing? Is it a Blue/Red state thing? Do CBS viewers have the super-power that they able to tell which cable boxes are Nielsen boxes? We’re desperately trying to understand, as no one we’ve ever met watches programming on CBS, or will admit to doing so. In fact, no one we’ve ever met has ever met anyone who watches CBS programming. In fact, knowing someone who watches CBS has become more novel or hip than having a gay, disabled, terminally ill or concert zitherist friend. It’s a defining characteristic, “Oh yeah, you remember Jim, the one who watches CBS...”

Aside from the four simultaneous versions of CSI that CBS runs (we weren’t aware the CSI franchise was this out of control - it's only a matter of time before they come out with CSI:CBS or CSI:CSI (chronicling crimes that happen only on the set of CSIs)), another permanent fixture in the top ten is Two and a Half Men. A funny drinking game to play when watching Two and a Half Men (the same went doubly for Everybody Loves Violently Bleeding From The Ears Raymond) is to do a shot every time the “This Laughter Is Bringing Me To Orgasm” laugh track plays after a non-event (DB does not endorse or sponsor this activity, as you will die). It’s amazing – they’ve almost effectively replaced actual jokes and punch-lines with cuing the laugh track (unless there’s something about Charlie Sheen raising an eyebrow that I’m missing).

One promising trend in the summer ratings was the demise of reality shows, as viewers are finally starting to realize that “professional” reality show auditioners/contestants are way more annoying than real actors, although the only difference is the networks’ own forced semantic finagling. Unfortunately reality shows have been displaced with American Idol style programming, which cannot die fast enough (although we always marvel over how airtight the contracts and release forms people sign to get on these shows must be, since no one ever comes out and talks about how ridiculously scripted they are).

Television: Stat Snapshot [Wall Street Journal]

PS - We occasionally watch How I Met Your Mother

Carney: So the word on the Street is that the Fed is watching commercial paper market very closely. Not really concerned about mortgages. What are you hearing there in Wyoming?

Jackson, Wyoming Correspondent: I caught 5 flyfishing today and now I'm at the rodeo.

Forget bonuses. The question for many in finance right now is whether they'll still have jobs at year's end.

The chorus of those saying there will be layoffs on Wall Street has gotten louder, and the message clearer. Weeks ago we told the viewers of CNBC's On The Money that units in investment banks linked to complicated debt products would be most vulnerable to layoffs. We named Bear Stearns and Lehman Brothers as likely cutters.

Yesterday CNBC's Charlie Gasparino named Bear and Lehman, and threw Goldman Sachs into the mix. The cuts are likely to come shortly after Labor Day. This morning, the Lex column in the Financial Times adds the Royal Bank of Scotland as a probable cutter. It also gives some great background on why structured finance groups are under such pressure.

This rapid shedding of staff reflects the urgent need to cut costs as revenues decline in this highly lucrative and (until recently) growth business. Lehman and RBS, for example, topped the underwriting league tables for asset-backed securities last year, according to Dealogic. Cutting back quickly is par for the course for investment banks, with their high staff costs. It will help, but won’t replace lost revenues. For the top 10 global investment banks, fixed income revenues (where most asset-backed business is booked) reached more than $27bn in the first quarter – more than double the total five years before, according to Credit Suisse. And structured finance has been particularly profitable, so margins are likely to decline too.

Structured finance profits [Financial Times]

Despite what many in the business media seem to believe, Warren Buffett did not spring fully formed from the mind of Zeus. He too was born of woman and today the old guy celebrates his 77th birthday. As a gift to him, we're opening up our special vault of Warren Buffett posts. Some very special items can be found inside.

There's the time we wondered whether Warren Buffett is going to Hell. That prompted him to write a letter about DealBreaker. Let's not forget the time some Australian called him a 'notorious tightwad.' Or the day we learned he had disowned his granddaughter.

Looking back on that list, we have to admit it looks like we've been a bit harsh on the guy. (Maybe that's why no-one at Berkshire returns our calls when we ask for interviews or even just glimpses of the Oracle.) But we're pretty sure Warren's not too broken up over these DealBreaker posts. He's got a lot to cheer him up. A lot of women. Look at all the ladies who seem to have crushed on him in the last year: Liz Claman, Becky Quick and WallStrip's Lindsay Campbell. The girls at Hooters loved him too. And last year, on his birthday, the Dub-Bee got hitched to his longtime sweetheart.

So happy 77th birthday, Warren. Enjoy that Dairy Queen sundae!

China Finance Minister Exits Amid Impropriety Claims (Bloomberg)
The Chinese finance minister has left his post after allegations of improper conduct leveled against him by state newspapers. Hopefully for him, these improprieties don't rise to the level of that one guy who was in charge of food and drug safety, who was eventually executed. On the other hand, some think this is pure politics and that the charges are just an excuse, which would probably be the best thing.

Grower recalls 34 tons of spinach (Mercury News)
Last year it was E. Coli in the spinach supply. This year it's salmonella, as a California spinach grower is recalling 34 tons after testing revealed a tainted sample. At the time, last year, the whole hysteria seemed like it got blown out of proportion (probably the case with all of these food recalls), and it could easily happen again here if incidents multiply.

Yahoo’s New President Oversees a Shake-Up (NYT)
Just a few months after shoving out (okay, shoving up -- they made him Chairman) CEO Terry Semel, Yahoo is putting more heads under the guillotine. In other words, simply making a few changes at the top doesn't seem to have had much of an effect... so they're making more leadership changes. The big change is that the company's top sales executive is out the door, though it's hard to believe that this will change much. After all, it's hard to be good at sales if you don't have something good to sell.

Rumored iPod update stokes Apple stock (Mercury News)
Apple's stock jumped yesterday on speculation of yet another iPod. Just wondering, will iPod fatigue eventually set in. It seems like it would have to, but who knows? Isn't the news of another iPod something of a yawner?

$$$ Two new studies reveal secret sauce used by activist hedge funds. [AllAboutAlpha]

$$$ Female Piratery or Female Lies? [LoSC]

$$$ Most successful traders enjoy shoplifting, and so did Lindsay…until today. [WallStrip]

Closing Bell brought to you by Financial Times.

The market has been conditioned in this August stretch to reward the absence of apocalyptic news with large rallies. Today was no different!

-No hedge fund combusted (ok, Basis Capital admitted they were very badly burned, and Cheyne Capital needs a couple skin grafts)
-Every third fixed income trader at JPMorgan did not get shot (happened, a bit graphic)
-There was no flight to quality in giant diamond-covered skull investments (ok, so that also happened)

We cry uncle… we admit it (along with most market analysts), we’re as confused as you are.

It seems so many institutions were clicking their heels and wishing for a Fed rate cut in September that everyone drank the Kool-Aid and the major U.S. indexes were all up close to 2%. The Dow finished up 1.9%, the Nasdaq was up 2.5% on the day and the S&P 500 rose 2.2%.

Major news on the day included Altria trying to quit smoking (up 1%), Apple coyly announcing that they are going to announce something (up 6%), Big Lots getting bigger and lottier with a 4x profit surge (up 10%) and more ratings cuts for home-builders.

More hard core market pornography from FT Alphaville.

“For the Love of God,” the platinum skull that Damien Hirst studded with 8,601 diamonds and called art, has been sold. An unnamed investment group—perhaps requesting anonymity because this is the kind of purchase that gets you a reputation for being insane—will pay $100 million in cash for the piece, which had been on the market since at least June 3.

Less than two weeks ago, Eli Broad, who recently seized the “opportunity” to give Goldman’s GEO fund a bunch of money, warned that major losses hitting hedge fund managers would hurt the contemporary art market, and that many expensive pieces would go unsold. A spokeswoman for Broad declined to comment on whether or not her boss is currently in the process of removing egg from his face. Is the sale indicative of market woes being over or of someone having taste in “art” so bad he/she said “credit crunch be damned, I’ve got to have this thing” (or of Eli knowing nothing)? We say a little bit of both.

On a more personal note, we’re sad to say that it’s highly unlikely that Stevie Cohen, who owns Hirst’s dead shark, was the buyer, as SAC was down as much as 9% at one point this month (which we like to call: "SAC's worst. month. ever.").

Earlier: What The Market Hath Wrought

Hirst Sells Skull for $100 Million, Manager Says [Bloomberg]

Another hedge fund hit hard by the contamination from subprime sludge has filed for bankruptcy. This time it’s Basis Capital, an Australian hedge fund, that has thrown in the towel. And once again, it’s hoping it’s towel lands on the beach in the Cayman Islands.

Losses in the Basis Yield Alpha Fund could exceed 80 percent, according to Bloomberg. Basis Capital was founded in 1999 by Australian bankers Steve Howell and Stuart Fowler. As recently as May, the firm had more than $1 billion in assets under management.

At the end of July, two Bear Stearns funds filed for bankruptcy in the Cayman Island, and asked a US judge to block any lawsuits from lenders and investors while the bankruptcy in the Caymans went ahead. The judges in the Caymans have a record of favoring fund managers, which has made the Caribbean nation an attractive place for hedge funds to organize. Three out of four hedge funds globally are incorporated in the western Caribbean islands.
The judge in the Bear Stearns case has not yet blocked lawsuits against the funds, saying he needed more time to decide what to do. Most of the assets of both the Bear Stearns funds and the Basis fund are reportedly in the US.

Several big Wall Street firms are lenders to the Basis fund. JP Morgan Chase Bank, Goldman Sachs , Citigroup, Morgan Stanley, Lehman Brothers and Merrill Lynch are all reportedly listed as creditors.

Basis Yield Files Bankruptcy Over Subprime Defaults [Bloomberg]

DealBreaker’s probing coverage into the search for a name of News Corp and NBC Universal’s online video JV is over. The two companies finally put that billion dollar brain-trust to work and came up with a name that is bound to draw viewers and admirers alike.

The winner – Hulu. Hulu. We’re serious. Hulu – the result of a five month search. Hulu – when you get punched while trying to say the word “Hula.” Hulu – the lieutenant commander of the Enterprise when everyone has a cold. Hulu – how George Bush mispronounces the first two syllables of the folksy word “hullabaloo.”

It took the ad wizards five months to “capture” the spontaneity and child-friendly assonance of hip techie names like Lala, Tinkie-Winkie, Joost, Wii, WiiWii, Yahoo, Belo, PooPoo, Lyondell Chemical Company and Fuchs Petrolub AG*.

Conclusion - Either the marketing team is borderline retarded or it took Rupert this long to shout “Hulu” out his window during a storm in which he thought the Nothing was consuming the remnants of Fantastica and the Ivory Tower in which the childlike empress resides (which has been our theory all along).

The new site is going to begin invitation-only beta testing in just two short months. It is expected to launch in 2130.

News Corp and NBC Universal name video site Hulu [Yahoo Finance]

*There is a company that makes lubricants called Fuchs (we had to reprint it to believe it)

It seems like half of CNBC’s on air talent is on vacation this week. And, if you trust this story on today’s Page Six, it’s not a moment too soon.

The femmes have become a bit more fatale over at the business network, according to Page Six. There are apparently too many queen bees and too little honey in the hive of CNBC.

CNBC'S endless fawning over "Money Honey" Maria Bartiromo and her younger, fast-rising rival Erin Burnett has the network's lesser-known finance femmes on the warpath.

A source says reporters including sexy blonde Melissa Francis, who covers energy, have complained to CNBC suits that while they get zip, Bartiromo and Burnett are treated like princesses - with massive promotion, regular gigs on the "Today" show and "NBC Nightly News," perks such as limos and gushing quotes from network brass in newspaper articles.

"The catfight that started with Maria being jealous of Erin's rise has spread down the line. Now all of the other female reporters are getting p - - - ed off," our insider said.

"They're going to management and telling them they want equal treatment - better public relations, better placement on the air. They are all being divas now. It's gotten ridiculous."

Page Six adds that “CNBC has muzzled Bartiromo, Burnett and Francis.” But an unnamed network flack denies everything. “That’s insane. It sounds like the jealousy is coming from outside the building," the flack says.

This should probably be read with a bit of skepticism. To begin with, some of the details are wrong. Melissa Francis is the host of On The Money, not “an energy reporter.” More importantly, here at the DealBreaker Bunker we’ve got a pretty good idea about what goes on inside the Global HQ of CNBC and we haven’t heard anything about a “catfight.” The ordinary rivalry that goes on insider all networks—certainly. But this seems overstated.

After the jump, a very boring reading of the Page Six item and two crazed, conspiratorial readings.

The specter that is haunting the markets lately goes by the name “1987.” A stock market runup, a buyout boom, high-yield bonds, increased government regulation, tax hikes on investments and buyouts. It all seems eerily familiar to many people with long memories. And the chart above is not exactly re-assuring.

But, surprisingly, some traders take the similarities to 1987 as a contrary indicator.

“There’s no way the Fed will allow October 19, 1987 to happen all over again,” a trader told us Monday night after his fifth scotch.

For some people, there’s always a bull market somewhere. And the assumption that a rate cut can and will save the markets—or even the broader economy—may be wishful thinking. Or just the scotch talking.

The Federal Reserve’s intervention is credited with the fast recovery in the Dow in 1987, when the stock index finished slightly up for the year. A gross domestic product grew 3.7 percent in 1987's third quarter, and continued in to grow in the subsequent quarters. There was the Fed fueled rock growth of 7.2 percent in 1987's fourth quarter, 1.9 percent in 1988's first quarter, 5.2 percent in 1988's second quarter, and 2.2 percent in 1988's third quarter. Buyouts resumed. High yield debt kept finding buyers. Jim Cramer famously made a lot of money.

But it didn’t last long. The leveraged buyout market came to a crash in 1989. The Dow turned bearish the next year. The country went into a recession. And many believe that the bear market and recession were on the early nineties were made far worse by the Fed’s 1987 intervention, which inflation hawks say created the illusion of prosperity and led to lots of capital misallocation. When market realities began to set in and capital started fleeing the dead-ends into which it had been led by the siren song of easy money, the pain really started?

Is the Federal Reserve trying to trod a more careful path this time? One thing’s for sure, if they don’t cut rates in September some will no doubt scream “they don’t know what they’re doing.” But it’s still an open question whether the Punch Bowl Caucus really understands what it’s doing.

CEOs of the world, unite! Forget that CEOs make 364 times more than the average worker (not including perks and benefits) - the average PE and hedge fund manager makes 61 times that of the average CEO.

Side rant regarding sub-workers: The study, conducted by the Institute for Policy Studies and United for a Fair Economy (IPS / UFE), factors in part-time jobs to the average worker salary. If you take the average for a full-time non-managerial job (40k), CEO pay is a mere 270 times the average worker. It’s good to know a fairer society is only a few theoretical adjustments away.

Don’t get your guillotine mobs in a bunch though, CEOs have toned it down, from the lavish 525 times the average worker salary they made in 2000 (that was the record). Forget the fact that in 1989 CEOs made only 71 times the salary of the average worker (Reagan just paved the way for that socialist Bush). Seriously, forget it. Sleep tight knowing that people who make $40k are only imaginary, like the borough of Brooklyn, or the strange creatures adorning the cover of Barbara Ehrenreich’s diary (those aren’t unicorns).

The real story is that CEOs are being forced into exploitative contracts, lulled by the false consciousness of 5 and 44. Sure, the common worker can get coerced into an oppressive labor agreement because he needs a common wage to survive, but CEOs need a robust portfolio of high-yielding alternative investments to survive as well, at the country club. CEOs have never felt as inadequate as members of the Second Estate, partly because PE/Hedge fund managers have several more estates.

CEO pay: 364 times more than workers [CNN Money]

For the second time in two days, RenTec has denied plans for a minority stake sale, telling Reuters, “We are not in discussions and there are no plans…There is no truth to the story." Renaissance had previously told the Financial Times that there never has and never will be anything in the works. (FT choose not to believe them, and you shouldn’t either. They will be worn down, it’s only a question of when (if anyone has the algorithm that determines how long it takes to break the 1.7 Billion Packs/Day Man, let us know. RT employees, don't be bashful.))

Earlier: James Simons Will Sell Stakes For Cigs

Renaissance Tech says no plans for stake sale [Reuters]

Little ink should be spilled debating whether or not investment banking sucks. Whether your answer is "Yes" or "Yes, very much so" is a matter of preference. 100-hour work weeks + enforced genuflecting to spreadsheets and associates alike + a Vitamin D deficiency + the fact that the toll being taken on your body as a result of said occupation has the same side effects as massive intakes of Lemon Lime Gatorade + the sleepless nights spent wondering how big or small that bonus will be + the missing “cool (we lost three billion dollars in a matter of weeks)”-factor associated with being a hedge master (or even minion)? Pass. But can one actually make the case that investment banking is more demanding than serving in Iraq? Apparently. Deal Journal reports Capt. J. Dow Covey’s opinion on the matter:

“I practiced law for three years,” he said, “then got into investment banking. When 9/11 happened I just had to sign up with the Army. Investment banking is a lot more stressful than this.”

Okay. Except that when you’re living in your cubicle at 270 Park, there’s very little risk of getting shot (pray as you might for it to happen), and call us crazy, but not having to stress over wondering if we’re going to die today seems to displace, uh, everything else. But that's just us-- crazy! Thoughts? (NB: we do not discount the risk of heart attack associated with working in IB, or suicide, either. If you ever feel like giving up, or just need to talk to someone-- tips at dealbreaker dot com.)

Investment Banking: More Stressful Than Serving in Iraq [Deal Journal]

DaimlerChrysler released its first earnings statement after its adopted baby left the nest to be raised by a three-headed dog. The Q2 result – a 14% drop in profit and 3% dip in revenue compared to the same period last year. The real DC explains that the profit drop is due to artificially inflated gains last year from selling a stake in Airbus owner EADS.

DaimlerChrysler expects to take less of a hit from transferring 80% of Chrysler to Cerberus, at around $3.4 billion instead of the $4 to $5 billion originally braced for. The Company will be allowed to sell a loan to Cerberus next August, and date again.

DaimlerChrysler Ag (NYSE: DAI) is up 1% in pre-market trading.

In other auto news, French car maker Renault denied that it was interested in Volvo. Renault Chairman Carlos Ghosn commented that a Volvo in French hands would be left untended and that the company “doesn't need a new [Volvo]. What it needs is new products and technology, and a good shower. It is not a question of principle, but one of good sense."

Ford keeps flashing its Swedish tended Volvo around for others to ogle, along with its other luxury brands Jaguar and Land Rover as part of a turnaround strategy.

Renault’s outlook is upbeat, as it doesn’t think it can sink any lower in the European market. Actually it thinks it can slip a bit lower, but after slipping a remaining little bit, things have nowhere to go but up! Everyone has to hit the ground sometime, right? From MarketWatch:

Ghosn said he expects Renault's share of the European market to have bottomed out later this year and that it should start rising again in 2008, thanks to a 26-model new product offensive that started in June with the launch of a new Twingo city car and as sales of the Laguna lift off in October.

DaimlerChrysler profit drops 14% [MarketWatch]
Renault not interested in acquiring Volvo [MarketWatch]

More fallout from the mortgage mess. Only a month after CIT said it would sell its mortgage origination business, yesterday it announced that it was simply shuttering it instead.

“The move comes as dozens of other financial institutions flee the free-falling business of making home loans to consumers with subprime credit. Last week, Lehman Brothers closed its subprime mortgage unit, and Capital One shut down the wholesale unit of GreenPoint Mortgage,” Crain’s New York reports. Bear Stearns had shut down two of its mortgage units the week prior to last. HSBC, one the the biggest providers of subprime mortgages, has shut down some operations but is far from exiting the mortgage origination business.

CIT is eliminating 550 jobs across 25 offices by shuttering the operation.

CIT first reported problems in its mortgage business, which caters primarily to subprime borrowers, six weeks ago. At that point the Manhattan-based firm wrote down the value of its roughly $10 billion portfolio by $765 million, resulting in an unexpected second quarter loss of $135 million. Its stock plummeted, as investors feared further writedowns to come. On Tuesday the shares lost another 4%, sinking to $35.85 by late morning.

So far the mass layoffs haven’t yet hit Wall Street. But many fear that just as the problems in the subprime mortgage market spread to other credit markets, the layoffs may follow as well.

CIT shutters lending business, takes charge [Crain's]

The Murdochification of the Journal continues...

Cheyne May Liquidate Commercial Paper Unit Amid Market Rout (Bloomberg)
Tremors in the commercial paper market scare as more than anything else, since commercial paper is like the oil that keeps the gears of commerce spinning. Without it, everything just seizes up, coming to a crashing, burning halt. Not fun. Cheyne Capital Management may be forced to liquidate its commercial operation, as S&P has lowered its credit rating (good timing). The hedge fund management firm, set up by to ex-Morgan Stanley bankers, says it has enough cash to keep the business going through November.

Credit problems are spilling over into the student loan sector (CNBC)
Last night DealBreaker editor John Carney explained to the On the Money audience how the credit crunch may combine with action on Capitol Hill to make student loans an expensive cocktail for college students. Of course, loose credit for college has probably made education an over-valued asset anyway. Introducing some rationality into this market may not be such a bad thing.

Wonder Bread bakery says region has gone stale (San Diego Union Tribune)
It's weird to think that there are whole regions of the country where you can't get Wonder Bread anymore. Granted, it's weird to think that there are people out there that still buy the stuff -- certainly we don't know any. But there was something amusing about seeing it on shelfs -- it did at least have a nice bag. That being said, you have to imagine the company could've tone just a wee bit more to change with the times. Their product wasn't so good, like Coke, where you just don't mess with it. Perhaps a sourdough, thick-crusted wonder bread would've done the trick.

General Mills to close Trenton plant (CBC.ca)
Wow, rough times for everyone in carb sector. Not only is Wonder Bread pulling out of more markets, General Mills is laying off plant workers. The company also announced that it's getting out of the once-lucrative frozen waffle business. Of course, the 800-lb. gorilla in the space, Eggo, is owned by Kellog, and that won't be going anywhere. Oh and Eggos are gross.

Home prices here up, but not way up (Seattle Post-Intelligencer)
We're starting to wonder whether there are some errors about how housing prices are tabulated on a national and local scale. It just seems to be a recurring them that while the overall housing market is going down, every major municipality claims to be bucking the trend. Come on -- the whole decline can't be concentrated in Detroit and Las Vegas. Anyway, if you believe it, add Seattle to the list of cities which continues to see prices rise.

$$$ Renaissance: Making Stuff Up About Bill Gates for Fun and Profit [Paul Kedrosky]

$$$ “People think it’s a big drug-sex thing out there when it’s really, really not,” the trader says. “It couldn’t be farther from the truth.” [Portfolio]

$$$ Carney, On The Money, CNBC, Tonight, 7

$$$ Blue Nile, Inc. (NILE)

Sponsored by the Financial Times.

The day started ugly. Merrill Lynch cut the ratings on Bear Stearns, Citigroup and Lehman Brothers. The was the second day in a row of downgrades for Bear and Lehman, who had been cut (along with Morgan Stanley) by Goldman Sachs on Monday. “Kicking them while their down,” some said. Shares in Bear, Citi, Lehman, and Morgan Stanley all fell in today’s trading.

Much of the chatter today was about exposure to credit market losses. Reports pegged State Street as having the largest exposure to asset-backed commercial paper, one of the markets where liquidity has recently become as scarce as rocking horse manure. State Street fell almost 4% today.

The release of the notes from the last Fede