Wow. http://www.bloomberg.com/apps/news?pid=20601087&sid=aiI66i481amk&refer=home This is getting exciting
Oh my god - I’m moving.
Just don’t move to the Cayman Islands 
sheesh…
I wonder if this is another 1 in 1000 year events for the black boxes (the 40th one this year).
So will we get the 75bps cut coming after this too still? I remember everyone on AF banking on 50bps. Has the Fed, Paulson, Bush, every bank out there been lying beyond belief?
I think they are in a tough bind. You can use this as a contrarian indicator if you like, but many people (yours truly included) think the financial system is on the brink of a collapse. Derivatives are currently valued at over $500 trillion dollars, and needless to say, as the world de-levers, you would think not everyone will be “making good.”
are derivatives valued at 500T or is that the notional amount?
Notional. And 500T is conservative.
Yeah, but that’s a wildly misleading number. Like I used to tell people when we had Eurodollar calls worth $80 that their notional value was $1m. It didn’t mean anything (and I didn’t really believe it).
Yes, I agree completely. But that number will strike fear into the marketplace, where probably a large number do not really understand what a derivative is.
This is just nutty!
Now a rumor is going around that Lehman Bros. is in trouble. But note that in this environment, there will be many rumors, with 90% false. But what if?
where can I hide…?
Lol. Why NOT to watch cnbc! Check out this, Tuesday, March 12, 2008: http://www.cnbc.com/id/15840232?video=682914860&play=1
This entire Bear Stearns issue is not making sense to me. How can Alan Schwartz say, We have no liquidity problem, the earnings estimates on the street are appropriate and I have no idea where the rumors are coming from. Then in under a week, the board approves a deal for $236 million when only 5 days earlier the company had a market cap of about $7.5 billion dollars. I cannon fathom what has happened since the 12th, or that Alan had no clue as to what the true state of the balance sheet was that caused the firm to sell for such a discount. I suppose that it all could have been a blatant lie, but I hope that is not the case.
WanderingCFA… go look at the 10k. The ink isn’t even dry and they had $17 billion in cash ($100+/share), no subprime exposure (they were actually net short) and $90/share book value. THIS is why you stay out of financial stocks. The house of cards is collapsing. Tell me you could see this being 2 (a fake number, actually ZERO)... ------------------------------------------------------------------ The Company's CDOs and subprime-related exposures (net of hedges) as of November 30, 2007 is presented below AAA - Super Senior Exposure: November 30, 2007 High - Grade Collateral 167 Mezz Collateral 597 CDO^2 Collateral 1 ----------------- Total AAA - Super Senior Exposure 765 Total Below-AAA Exposure (10) ----------------- Total ABS CDO-Related Exposure 755 ================= ( in millions) U.S. Subprime Mortgage Exposure: Subprime whole loans 496 Investment-grade Subprime securities 1,062 Non-investment-grade subprime securities 211 ABS CDS (2,351) ----------------- Total U.S. Subprime Mortgage Exposure (582) -------------------------- At the date of filing, the Company’s long-term/short-term debt ratings were as follows: Long-Term Rating Short-Term Rating ------------------------------------------------------------------------------ Dominion Bond Rating Service Limited A(high) R-1(middle) Fitch Ratings A+ F1 Japan Credit Rating Agency, Ltd AA- NR Moody’s Investors Service A2 P-1 Rating & Investment Information, Inc. AA- NR Standard & Poor’s Ratings Services A A-1 ------------------------------------------------------------------------------ NR - does not assign a short-term rating
The fundamental mechanism for financial firms is breaking down. I wouldn’t be making any judgments about the value of any of these Wall St firms until the storm is gone…and there may not be many of them left once this maelstrom of credit default stops. >>>>This entire Bear Stearns issue is not making sense to me. How can Alan Schwartz say, We have no liquidity problem, the earnings estimates on the street are appropriate and I have no idea where the rumors are coming from. Then in under a week, the board approves a deal for $236 million when only 5 days earlier the company had a market cap of about $7.5 billion dollars. I cannon fathom what has happened since the 12th, or that Alan had no clue as to what the true state of the balance sheet was that caused the firm to sell for such a discount. I suppose that it all could have been a blatant lie, but I hope that is not the case<<<<<<< Welcome to the new world of moral hazard. This is basically the root of all our financial mess. From buyers lying on their loan applications, to mortgage brokers lying to underwriters, to underwriters lying to wall street banks, to wall street banks lying to investors. Once a system is devoid of any integrity, once transparency fades into opacity, the only inevitable result is a complete breakdown of our financial and even economic system. Moral Hazard…Yes, it’s a real problem. In fact, you can go as far as saying it’s THE problem. Off-balance sheet financing, SIVs, federal bailouts, you name it.
gdiddy Wrote: ------------------------------------------------------- > Once a system is devoid of any integrity, once > transparency fades into opacity, the only > inevitable result is a complete breakdown of our > financial and even economic system. > > Moral Hazard…Yes, it’s a real problem. In > fact, you can go as far as saying it’s THE > problem. Off-balance sheet financing, SIVs, > federal bailouts, you name it. I agree. We gotta take these bastards. Now, we could fight 'em with conventional weapons, that could take years, and cost millions of lives. No, in this case, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture, be done on somebody’s part
Did anyone listen to the JMP conference call where they had an individual investor ask a question. He asked about the valuation of BSC and then ended with “well, I am vote not to approve this transaction”. I thought they were supposed to screen these types of things. Looks like someone is loosing their job. As for BSC, I am not even going to try and value their firm right now. On the call it seemed like JMP felt fairly confident that the book value of $84 was in the right ballpark but that it was going to cost them $6billion to complete the transaction (de-leveraging, consolidation, etc) and that was the reason for the difference between $84 and the $2 offer price. Also I got the feeling that quite a few analyst think that shareholders will not approve the transaction, even though JPM kept saying “we fully expect shareholders to approve”. I think the actions of Alan and the BOD are what surprises me the most. If only people knew about his thing called “The Truth”. The JPM call is here if anyone is interested. http://investor.shareholder.com/jpmorganchase/presentations.cfm