By Danny
Bear Stearns, founded in 1923, is busted after a run on the bank. The Fed saved it, by illegally diverting funds through JP Morgan.
And 20 Canadian asset-backed commercial paper trusts declared bankruptcy today.
An English bank has been nationalized. Trust funds are being frozen and are going broke.
After bouncing up toward the 1K benchmark for the past week, Gold finally closes on the New York Mercantile Exchange above $1,000/oz for the first time ever:
The economic roller coaster begins its downward descent and picks up speed.
New Emerald City bonding, anyone?
Have a nice day.
12 comments:
Bond till the cows come home. The tax payers are on the hook, as long as I take care of my little pigs at the trough, I dont care.
Ah, how well I recall, some years ago, as concern about all these sub-prime mortgages and exotic new mortgage products [interest only loans, no down payment loans with fixed teaser rates adjusting higher automatically, "liar" loans, etc] were ramping up, Mr. Greenspan explaining that additional federal regulation of mortgage sales practices were unnecessary, because banks and other lenders had no incentive to make bad loans. That would keep them from making them, and so the market, unaided by government regulations, would prevent serious abuse of the system or serious economic consequences from too many bad loans.
Ah, how well I remember....
Meanwhile, check out Mary Hall's letter in today's Standard Examiner. That's 3 letters defending Wick and 3strikes against Godfrey.
Key forecasters says US in recession
Sutton Financial: We're Headed for a Depression
so danny where are you putting your investment money?
Rudi edited a post of mine and added some material to make the article he published.
Had I included a plot, I would have shown AAA mortgage debt selling at 70 cents on the dollar, and BBB selling at 15 cents. What that means, is that if they had to mark to market, almost every bank in the country is deeply bankrupt right now. And all those pensions that have mortgage debt are insolvent, as are the companies that have them.
The Fed is trying to reflate the housing market by creating inflation, to re-inflate these bonds. I don't think it has a prayer of working. If true, the future is far bleaker than 1929.
Rather than worry about investments, I fear we may be worrying about food.
As for me, I have only one rule on investment advice: never give it. Somehow, it always ends badly. Secrecy is the one cardinal rule.
But I do worry a lot about our economy these days, as you may have noticed. Perhaps when one is on the Titanic and it has struck the iceberg, the best thing to do is have a nice, big dinner and think about something else.
Secy of the Treasury was on the talks this morning, pumping sunshine up the rear end of whoever was interviewing him. He did not look or sound half as confident as his words. The economy's "fundamentals are strong," American credit markets are "strong and flexible," "all economies have ups and downs." He gave not a single straight answer to a single question. Was especially squishy on Bear Stearns. And when asked how important he thought it was that the Fed cut interest rates again this Tuesday, his reply was "that decision is the Fed's responsibility," which of course did not answer the question at all.
But fear not, Our Precious Leader, George W. Bush, has noticed that "the economy isn't doing well" right now. We can all relax. The Precious Leader has noticed the downturn and has turned his razor sharp mind and perceptive judgment to the problems and their solution. Only naysayers would doubt that economic salvation is but days away.
For more discomfort, note the following:
Click Here
It shows the notational value of Bear Stearn’s derivative contracts at $13 TRILLION dollars. That’s the value of the entire US economy for a full year. Somehow, the Fed didn’t want to see that all unwound.
JP Morgan’s derivitives total $70 trillion. Their leverage is 74:1!
Given that these companies have net cash in the low billions, and this amount of leverage, you see the problem, and why the Fed is printing money and gold is skyrocketing.
But if you think you are a little person, and can stand back and watch with glee as these corrupt, incompetent SOBs fall, think again.
Click Here
If somebody can tell me I’m wrong. Please do so.
Thank goodness I’m LDS, or I fear I'd be an alcoholic by now.
It may be time to gas up my spaceship and return to my home planet. Well, I can imagine . . .
This March 8 story, from street.com, is interesting, too...
Bear Stearns Fat Cats Cashed Out at the Top
BOSTON -- Wall Street bank Bear Stearns (BSC - Cramer's Take - Stockpickr) is right at the heart of the subprime mortgage meltdown. It's reeling from massive, multibillion-dollar losses at two hedge funds.
And every investor who has watched the stock collapse from more than $172 to just $117.78 in a few months is probably kicking himself for not selling at least some back at the peak, before the crisis hit.
Four savvy investors did just that.
Step forward, Alan Greenberg, Sam Molinaro, James Cayne and Warren Spector.
Who are they?
Top honchos at ... Bear Stearns. (Or they were: Spector has now left in a management shake-up. The others remain.)
Between them, the four quietly cashed out more than $57 million worth of company stock before the crisis hit.
The executives saved themselves nearly $16 million by their astutely timed sales, which were disclosed in a series of public filings.
Those losses got passed on to the unlucky outside investors who bought the stock.
Bear Stearns declined to comment.
This article was published 6 days before BS defaulted, of course.
Rudi:
Bear Stearns announced today it has agreed to be bought out by JP Morgan for... wait for it... $2 a share. From the NYT:
Breaking News Alert
The New York Times
Sunday, March 16, 2008 -- 7:18 PM ET
-----
JPMorgan Chase Says It Will Acquire Bear Stearns for $2 a Share
Bear Stearns, facing collapse because of the mortgage crisis,
agreed Sunday evening to be bought by JPMorgan Chase for a
bargain-basement price of less than $250 million, the two
companies announced.
The all-stock deal values Bear Stearns at about $2 a share,
based on JPMorgan's closing stock price on Friday, the
companies said. In contrast, shares of Bear Stearns, which
fell $27 on Friday, closed at $30.
Yeah, Curm. I've been following this story since early today. I'll probably put up a new article later, once it's clear how the Asian markets react to this news.
Rudi:
But... but... but... Secretary Paulson [R-Bush Cabinet] says our economic fundamentals are strong, and our credit markets are strong and resilient. You.... you... you must be a naysayer, that's what you must be.
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