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T O P I C     R E V I E W
YaYawoman
Member # 4505
 - posted March 16, 2008 21:16
Hi everyone.

I know lots of people find thes posts boring but this information is actually very important.

The FED reduced the discount rate .25. This is not the fed fund rate, that will probably happen on Tuesday,unless they panic again and emergency cut tomorrow.

They also bacstopped a deal with JP morgan Chase and Bear stearns. JP morgan is aquiring Bear Stearns for 2 dollars a share. The FED is doing a 30 billion NON RECOURSE loan to JP to help fund it.

Bear Stearns was the nations 5th largest bank. In august the share price was around 150.00, on this past friday march 14 it was 50.00, at close on friday was 30.00. Monday it will be 2.00. Nearest thing to BK without doing BK.

Now keep in mind that earlier last week rumors were swirling about a possible BK for Da Bear. Ace Greenberg got on cnbc and said it was rediculous, just rediculous that their balance sheet and capitalizaion was "just fine". FRiday announcement after market closed that FED sponsoring talks for JPMorgan and Bear talks, monday pffft. I bet the lawyers are drooling.

This was all announced tonite, sunday. sniff sniff I smell panic.

This next week will be interesting, dare I say historic, and I think that everyone should keep this turmoil in mind. Pay down debt, live below your means, get in physical shape and if you are thinking of making a big-ticket purchase like car, house etc maybe reconsider for a bit.

Oh, and just for neato-ness, gold per oz rose over 30 something dollars in the past 4 hours alone. 1,024 dollars an oz. Go Glod!! hehehe.

Thanks for your tolerance for my hobby/interest.Have a great week everyone.

Small edit:
Obviously the pay down debt/healthy life advice above is more a longterm goal rather than a better do it quick thing, but I wanted people making large purchases/increasing debt to keep it in mind. Also keep a bit of cash on hand.

RE: the Bear and JPM deal, I was a bit off. It is a stock only deal to Bear shareholders, but the 30 bill non-recourse loan(gift) is there for JPM. I guess for the murky issues that may come up. Lawsuits, losses, counterparty risks. ouch.
 
The Famous Druid
Member # 1769
 - posted March 16, 2008 22:15
Bear Stearns were sold for about $240 million in shares, but their HQ building in Manhattan is worth about $1.2 billion, so this effectively means they paid JB Morgan around $1 billion to take the business. Not bad for a business that was worth 40-something billion a year ago.

/me wonders how much of a "performance bonus" the Bear Stearns board will be getting this year.
 
Callipygous
Member # 2071
 - posted March 17, 2008 18:37
Like I suspect most people here, I don't feel I really have enough real knowledge to pontificate on economics, but I do read and try to understand the analysis in the newspapers, and follow Paul Krugman's blog via RSS. I will admit that my impressions are partial as I have not found a right wing economics pundit that I enjoy reading yet. However from all I have read, most commentators seem agreed on a number of points.

This crisis and the recession that has started is very different from any other recent recession. An alarming number of commentators find the nearest comparison is with the 1930s and hint that this could potentially be as severe and intractable. The very limited toolbox of remedies that the now conventional monetarist theory propose for this situation will probably have little or no effect this time. Keynes, though he is now unfashionable, may offer more effective solutions.

All in all there seem to be some well founded reasons for the panic on the world stock markets, and it is not a good time to have a clueless, hard line, fundamentalist right winger in the White House. Thank goodness none of the three candidates who might succeed him are so rigidly dogmatic.
 
Colonel Panic
Member # 1200
 - posted March 17, 2008 20:41
Funny how Wall Street begged and begged and begged for deregulation, and told us that government was the problem and now they beg and beg and beg for government bailouts, corporate welfare, and for more government intervention because the greedy SOBs can't trust what is in each other's portfolios.

Can't have conservatives give up their Beemers for Hondas can we?

I don't want to say "I told you so" but I'll say it to any Conservative, Neo-Con, or Libertarian or other fantasyland delusional:"I TOLD YOU SO!"

Colonel Panic
 
The Famous Druid
Member # 1769
 - posted March 17, 2008 23:53
A commentator on the radio had an interesting take on the current situation...

He painted a picture of a crisis of confidence in the banking system, and briefly explained how _all_ banks, no matter how well run, are vulnerable to a 'run' on their deposits. When that happens, they either go under (which is bad for a lot of people) or find someone with very deep pockets to bail them out.

There's a very short list of people who can come up with tens/hundreds of billions of $$$ of non-borrowed money (for several reasons, borrowed money just won't work in this situation). Top of the list is...

...<drum-roll>...

China, with $US 1.6 trillion in foreign reserves.
Most of the other names on the list are arabs.

Ah the irony, the lasting legacy of Bush and the neocons may be a shift in control of Americas banking system to China and/or the arabs.
 
TheMoMan
Member # 1659
 - posted March 18, 2008 04:16
_________________________ Well back in the late seventies RMN turned on the printing presses. Jimmy Carter took the heat and put Paul Volker in charge of the fed, the Economy slowly recovered but Reagon took the credit, he was smart enough to leave Volker alone.

What does that have to do with now, who ever gets the clean up to this mess started will take enormous heat and probably serve only one term. The new pres. will take the credit.

CP remember when The Shrub wanted to privatize SS everybody would have their own self managed account. I feel sorry for the employees at Bear Sterns, especially those that did not invest out side of their 401k.

This is Enron, the dotcom, and housing bubble all rolled into one. Throw in a few oil spills and thats the Cons, and neocoms. Its not our fault.
 
YaYawoman
Member # 4505
 - posted March 18, 2008 04:46
So. A day which had promised to be one of the more interesting out there and I was looking foward to watching how it unfolded. The good, the bad, whether it ended in the red or the green I thought it was neat-o cool that I was going to get to watch it not only on tv but through the various financial commentary, blogs, comments and rumor sites I visit thanks to teh gloriouz intertubz.

But nooooooo. No connection after 11:30 am. No linkie, no net, no ticket on the schadenfreudeville express! no no no!! aaaaaggggghhhhhh!

1st thought? Crap, the bill. zoom zoom through the streets of this semi-rural town. Got current plus 2 extra months. nada.

Couldnt call comcast, vonnage phone. no cell phone. sigh.

Buy phone. Call comcast. blah blah blah"temporary service interruption" blah blha blah

aaaaarrrrggghhhhh!

Get up this AM and kick they boy to the bus(bless school I wish they went yearround)still no service.

Call comcast. beg please please when will they be done. lady checks and says the interruption shouldnt be affecting me. talks me through some troubleshooting and bam!! here I am. 24 hrs later, and having missed the comments real time, but now I toddle off into the far reaches of the net to catch back up.

It managed to close green by 21 pts. watching the commenters was actually fun this time looked all pasty/puky with fear. sniff sniff. hehehe

hey calli

you might want to check out calculated risk. Tanta was an underwriter during the commonsense days of lending and has a lot of usefull yet wonderfully snarky commentary on how things are now, how they used to be and how hozed we are. also very good at explaining the ubernerd details of the MTG market.

everyone have a great day
 
dragonman97
Member # 780
 - posted March 18, 2008 05:49
/me picks a nit about capitalization* of 'FED' in subject...every time I see it, I think it's some acronym that I don't know.

*Kindly ignore the pun...
 
YaYawoman
Member # 4505
 - posted March 18, 2008 06:37
OOOh. Are you starting a new pun thread? Great. Puns mixed in with an economic thread, forever and ever into eternity. This economic lehman is ready.

I also forgot to mention suddendebt.blogspot.com. It is a very calm and well written economic/finance blog.

It seems there may be a snag to the implosion/rescut of Da Bear. Scuttlebutt has it that billionaire Joe Lewis is considering voting no on the deal and trying to rally other shareholders to vote no. he invested a billion of his own cash in the company and is a tad irate. Any brits have any opinions/info on this guy? Does he have the stones to do it?
 
CommanderShroom
Member # 2097
 - posted March 18, 2008 06:53
I can't remember where I read this, I think it was the Washington Post though.

I read that JP Morgan in the buyout was not assuming the debt of Bear Stearn. Instead the government was going to take it. Now perhaps it makes some people feel more confident, but I can't say I am really one of them.

A bit disturbing, especially considering that there is talk of another point drop in interest rates.
 
YaYawoman
Member # 4505
 - posted March 18, 2008 07:14
The fed is extending a 30 billion non-recourse (read gift) "loan" to JP Morgan to help offset losses/lawsuits/further "unexpected" meltdowns in the alphabet soup of structured finance. CDO's, CPDO's,swaps,CMBS's,MBS's. whatever may bob to the surface at a later date. I do not have warm and comfy feelings about this either.

In a sort of Oddly Enough-type news the founder of ameriquest mortgage and former ambassador to the netherlands(he paid lots of shinola to shrub) died this morning in LA. Ameriquest settled a classaction lawsuit for 325 million about predatory and fraudulent lending practices. Ameriquest is now defunct due to Mortgage/housing whoas.

Sorry DMAN, cant resist.
 
TheMoMan
Member # 1659
 - posted March 18, 2008 09:07
____________________ YaYawoman Any one want some Country Wide Stock I found a trash can full.
 
YaYawoman
Member # 4505
 - posted March 18, 2008 10:33
HaHa. Sure. i can always use more TP.
 
The Famous Druid
Member # 1769
 - posted March 18, 2008 11:52
quote:
Originally posted by TheMoMan:
____________________ YaYawoman Any one want some Country Wide Stock I found a trash can full.

I was offered a job there a while ago, they were going to organize the visa, a generous relocation package, and a pretty good salary.

I'm fairly glad I refused the offer, moving to another country to work for a company that goes tits-up could be unpleasant.
 
The Famous Druid
Member # 1769
 - posted March 18, 2008 12:26
quote:
Originally posted by dragonman97:
/me picks a nit about capitalization* of 'FED' in subject...

*Kindly ignore the pun...

I have no interest in financial punnery.
 
YaYawoman
Member # 4505
 - posted March 18, 2008 14:30
TFD it is a very good thing you didnt, I think. On the mortgage broker outpost there has been threads about employers not even accepting applications from anyone who was in the industry. I think on the excwinsider site they have mentioned that too. If you ever want to heave a sigh of relief for not taking that job check it out. lots of shennanigans went on there. FBI is nosing around now too.

I guess they are looking for their pound of flesh.
 
The Famous Druid
Member # 1769
 - posted March 18, 2008 17:06
quote:
Originally posted by YaYawoman:
FBI is nosing around now too.

I guess they are looking for their pound of flesh.

People like that never have to account for their actions.
 
Ugh, MightyClub
Member # 3112
 - posted March 18, 2008 19:17
Yeah, and that just compounds the whole problem...
 
The Famous Druid
Member # 1769
 - posted March 18, 2008 23:15
They'll just do whatever they want if the regulators don't keep them in cheque.
 
YaYawoman
Member # 4505
 - posted March 19, 2008 11:30
I see large declines across the commodities. Demand destruction or hedgies selling to cover losing investments?hmmm

On the homefront I was rearranging the furniture but when I got to the couch I had to stop. I just couldn't budget.
 
The Famous Druid
Member # 1769
 - posted March 19, 2008 12:19
quote:
Originally posted by YaYawoman:
I see large declines across the commodities. Demand destruction or hedgies selling to cover losing investments?

It seems that no matter what they do, the big players just go from broke to broker.
 
YaYawoman
Member # 4505
 - posted March 19, 2008 12:57
I see debt people.
 
Colonel Panic
Member # 1200
 - posted March 19, 2008 17:41
But Mortgage Backed Securities are looking strong. It may be a great time to refinance this week.

Oh yeah.

Old Bankers Never Die, They Just Lose Interest.

CP
 
YaYawoman
Member # 4505
 - posted March 19, 2008 18:14
I have it on good authority that brokers were yelling from the rooftops "dammit, get your ars* in gear!"

*Auction Rate Security.

PS The auctions are failing miserably.

[Smile]
 
The Famous Druid
Member # 1769
 - posted March 19, 2008 19:29
With all the scary news in the financial pages these days, the futures looking pretty bleak.
 
YaYawoman
Member # 4505
 - posted March 19, 2008 21:06
Well guys here is a link. Citigroup is warning about leverage in it.
If you dont want to read it I will gist it

http://www.marketwatch.com/news/story/great-unwind-has-started-avoid/story.aspx?guid=%7B1DC25DFD%2D3543%2D4CF4%2DBE26%2D74EA4B9C9330%7D&dist=hplatest

Basically analysts at citigroup are warning about the great unwind beginning. Analysts are saying to avoid companies and countries that hav ecome to rely on borrowed money. They are advising against anything leveraged. Hedge funds, private equity, real estate. Equities in emerging markets are preferred over established nations.

This is sooooo amusing to me because basically these analysts are citi employees and warning against their OWN comopany. I find this as funny as Steen found the company memo that made him contemplate interpretive dance. hahahahahahahahahahahahahahahahaha.

Oh yeah

So I was golfing yesterday and my ball slammed right into the water. Damn those liquidity traps.
 




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