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bkkandrew · 14-03-2008, 12:16 AM

Looks like Bear Stearns will pip all-comers to the post in the race to be the first to go bust!

FT Alphaville » Blog Archive » This Bear market

This Bear market

The Bear rumours are back. As in Bear Stearns - stock down 12 per cent in New York on Thursday, while the five year CDS has gapped 120bp to 700bp. All sorts of uncorroborated rumours are flying.

bkkandrew · 14-03-2008, 01:50 PM

The Times Today:

Alistair Darling ignores the looming collapse of financial institutions - Times Online

Alistair Darling ignores the looming collapse of financial institutions

Alistair Darling's footling initiatives yesterday were a sideshow. There is one overwhelming challenge facing the business world and it is not going to be addressed by £10 million more for science teachers or £12 million for women entrepreneurs.

Western capitalism is, bluntly, being haunted by the spectre of a catastrophic domino-like collapse of financial institutions, one that if not prevented would without question lead to an economic ice age.

Mr Darling did at least acknowledge that a number of credit markets were “barely functioning” but then moved on to more trifling matters. Outside Westminster, however, fears remain that a major financial institution is close to collapse, or that policymakers at least believe it could be. Nothing else explains Tuesday's co-ordinated campaign by central banks and their increasingly desperate measures to pump more liquidity into a system showing fresh signs of paralysis. As one senior City figure put it yesterday: “There's the smell of death all right but no one can locate the corpse.”

En masse, the world is de-leveraging. On an individual level, moves by banks to call in debt and tighten loan conditions make perfect sense. Collectively, they could be devastating. Asset fire sales lead to falling prices which lead to shrinking collateral values and the need for more fire sales. It would not take all that much to tip the credit markets from the current state of paralysis (bad) to panic (much worse).

...And so it continues. Maybe I should start a poll - which Bank to go bust first (obviously excluding NR and the ones that already have...)

bkkandrew · 16-03-2008, 02:17 AM

Quote:

Originally Posted by bkkandrew

Looks like Bear Stearns will pip all-comers to the post in the race to be the first to go bust!

FT Alphaville » Blog Archive » This Bear market

This Bear market

The Bear rumours are back. As in Bear Stearns - stock down 12 per cent in New York on Thursday, while the five year CDS has gapped 120bp to 700bp. All sorts of uncorroborated rumours are flying.

And so it passes...

Bear Stearns | Stripped Bear | Economist.com

Bear Stearns
Stripped Bear

Mar 14th 2008 | NEW YORK
From Economist.com
Rescuing a Wall Street bank

AP

A CENTURY after John Pierpont Morgan bailed out Wall Street, his bank is at it again. In a dramatic move on Friday March 14th, the Federal Reserve Bank of New York and JPMorgan Chase made emergency funding available to Bear Stearns after other market players lost confidence in the beleaguered investment bank as a trading partner. As the credit crunch has deepened and broadened, the worst fear of many on Wall Street has been the collapse or forced rescue of a big bank or broker. That moment is now upon them.

JPMorgan Chase is Bear’s clearing bank and will act as a conduit for Fed funding. In a special vote, the central bank’s governors chose to allow JP Morgan Chase to bring collateral from Bear, including mortgage assets, to the Fed discount window in return for 28-day loans. Bear does not have direct access to the window because it is not a depository institution. The Fed has agreed not to hold JPMorgan Chase liable for any losses on the collateral posted. The central bank has resorted to such an arrangement only twice before, in the depression of the 1930s and in the 1960s.

...Cont...

And, who next? My money is on Lehmen Brothers or Citigroup to go bust. UK-wise Alliance and Leicester, Bradford and Bingley, HBOS and Barclays look like the betting-man's candidate...

Anyone still hold accounts with them?

bkkandrew · 16-03-2008, 02:24 AM

Quote:

Originally Posted by bkkandrew

And, who next? My money is on Lehmen Brothers or Citigroup to go bust. UK-wise Alliance and Leicester, Bradford and Bingley, HBOS and Barclays look like the betting-man's candidate...

Anyone still hold accounts with them?

Forgot, any European account holders should beware UBS (already insolvent) and without a Sovereign Central Bank for bail-out....

Butterfly · 16-03-2008, 08:39 AM

My bet would be for UBS to go down, but which branch I don't know,

bkkandrew · 17-03-2008, 11:33 AM

JPMorgan gets Bear Stearns for a bargain-basement $236M - USATODAY.com

Quote:

NEW YORK (AP) — JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.

JPMorgan Chase & Co. said the $2 a share, all-stock deal has received the required approvals from the federal government and the Federal Reserve. Bear Stearns shares close Friday at $30 a share.
The Fed will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

At almost the same time as the deal for control of Bear Stearns was announced, the Federal Reserve said it approved a cut in its lending rate to banks to 3.25% from 3.50% and created another lending facility for big investment banks. The central bank's official meeting is on Tuesday. Before the emergency move to lower the discount rate, which is the rate at which banks lend each other money, the Fed was widely expected to again cut its headline rate by as much as a full point to 2%.
The announcement from both the Fed and JPMorgan comes ahead of what some analysts expected to be a brutal day for global stocks. Already, before the announcements, New Zealand's markets opened drastically lower — then began to recover after the deal was unveiled.

A collapse of Bear Stearns could have created a further crisis of confidence in world financial markets amid a deepening credit crunch. JPMorgan's acquisition of Bear Stearns represents roughly 1% of what the investment bank was worth just 16 days ago.

The deal represented a 93.3% discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8% discount to its book value as of Feb. 29.

"The past week has been an incredibly difficult time for Bear Stearns," said Bear Stearns Chief Executive Alan Schwartz in a statement. "This represents the best outcome for all of our constituencies based upon the current circumstances."

98.8% discount eh? I'm off shopping...

Butterfly · 17-03-2008, 11:50 AM

yeah, something strange, I mean 98% that's not a fire sale, it's a rape sale

bkkandrew · 17-03-2008, 12:03 PM

^Yes, my man at JMP opined that if the deal wasn't done BSC would have gone Chapter 11 and possibly brought down JPM as a result, as they are by far and away their biggest trading partner and have massive exposure.

The FED are essentially lending JPM the money ($30BILLION) to protect the money that they (JPM) are owed. Nice to friends like that eh?

bkkandrew · 17-03-2008, 12:14 PM

Meanwhile back in the UK, HBOS looks down the back of the sofa for some spare cash...:

HBOS raises £750m of new capital in a bid to beat credit crunch - Times Online

HBOS raises £750m of new capital in a bid to beat credit crunch

Iain Dey, The Sunday Times

HBOS has raised £750m of new capital at a staggering interest rate of almost 9.5%, in a clear sign of the funding crisis facing the world’s banks.

...Cont...

9.5%....!!!!!!!!!!!!!!

Why didn't they just put the dosh on someone's credit card? They would have got a better rate than 9.5%... Maybe all the Director's cards were maxed out.

Jet Gorgon · 17-03-2008, 12:19 PM

Actually, I like how JP did the deal on a Sunday with the Fed trimming 25bp from its interbank rate, also today, a Sunday. A little morning cheer when Wall Street opens tomorrow?

Spin · 17-03-2008, 12:33 PM

Quote:

Originally Posted by Jet Gorgon

A little morning cheer when Wall Street opens tomorrow?

Highly unlikely, more like a total rout of the financials. US futures are trading lower by about 2.5% compared to close on Friday.

What was the fed thinking? 0.25%! WTF?

bkkandrew · 17-03-2008, 12:38 PM

^Don't know about cheer, but to avoid a 10-20% drop, suspension of trading and a rout of the USD. Wall Street futures are still showing -2.3% on Tokyo, despite their paniced actions..

Jet Gorgon · 17-03-2008, 12:41 PM

^ But, Spin, that's a stopgap bennie for JP. The Fed mtg is Tuesday, and it'll likely lower rates to about 2%. Pity the seniors living on savings and investments. I think Binky is hoping he can drown in his hot-tub tonight.

Butterfly · 17-03-2008, 12:42 PM

all is well, there is no need panic, everything is fine

Norton · 17-03-2008, 12:45 PM

Quote:

Originally Posted by Jet Gorgon

A little morning cheer when Wall Street opens tomorrow?

Afraid not jettie. Asian markets all down big time. Dollar at 98 yen, gold up to $1025. Euro markets will follow. No reason to think US market will do anything but go down as well.

Butterfly · 17-03-2008, 12:46 PM

Quote:

Originally Posted by bkkandrew

^Yes, my man at JMP opined that if the deal wasn't done BSC would have gone Chapter 11 and possibly brought down JPM as a result, as they are by far and away their biggest trading partner and have massive exposure.

that shit isn't going to go overnight, Greenspan was sleeping at the wheel when all that subprime shit was happening, I mean he knew what was going on, couldn't they have alerted the government about the sordid details of those mortgage brokers scams ?

Greenspan: 2 bubbles followed by 2 busts, the guy should be shot

bkkandrew · 17-03-2008, 12:47 PM

Quote:

Originally Posted by Norton

Quote:

Originally Posted by Jet Gorgon

A little morning cheer when Wall Street opens tomorrow?

Afraid not jettie. Asian markets all down big time. Dollar at 98 yen, gold up to $1025. Euro markets will follow. No reason to think US market will do anything but go down as well.

It hit 95.76 at one point according to Bloomberg...

Bloomberg.com: Worldwide

Spin · 17-03-2008, 12:56 PM

Quote:

Originally Posted by Jet Gorgon

The Fed mtg is Tuesday, and it'll likely lower rates to about 2%

You're right, i just woke up, still sleepy. Its the discount rate they lowered 0.25% and the big cut will probably have to be another emergency move before markets open on Monday morning. Bear Stearns were the victims of a run on Thursday and Friday, investors withdrew 16billion dollars in two days. Both Lehman Bros(tuesdaypm) Morgan Stanley (am wednesday) give q4 reports this week and it could get uglier than it is now.
From Bloomberg.com
"Joseph Lewis, Bear Stearns's second-largest shareholder, has spent more than $1 billion on the firm's stock since September, paying as much as $150 a share. Lewis, a 71-year-old billionaire, wasn't planning to reduce his stake, a person close to him said March 11. He's now entitled to $22 million of JPMorgan shares.

To put into perspective of how cheap Bear has been sold for:
"The price JPMorgan is paying is about one quarter the value of the securities firm's headquarters building in midtown Manhattan. The 1.2 million-square-foot, 45-story structure built in 2001 is worth about $1.2 billion, based on the average $1,000 per- square-foot that comparable office space in the city is currently fetching.

raycarey · 17-03-2008, 01:27 PM

Quote:

Originally Posted by Jet Gorgon

the Fed trimming 25bp from its interbank rate, also today, a Sunday. A little morning cheer when Wall Street opens tomorrow?

what are you on about?

14-03-2008, 12:16 AM	#41 (permalink)
bkkandrew Clingin' on... Last Online: Yesterday 09:08 PM Join Date: Oct 2007 Location: BKK Posts: 2,467	Looks like Bear Stearns will pip all-comers to the post in the race to be the first to go bust! FT Alphaville » Blog Archive » This Bear market This Bear market The Bear rumours are back. As in Bear Stearns - stock down 12 per cent in New York on Thursday, while the five year CDS has gapped 120bp to 700bp. All sorts of uncorroborated rumours are flying. __________________ Another escapee from the mad muppets of TV... To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

14-03-2008, 01:50 PM	#42 (permalink)
bkkandrew Clingin' on... Last Online: Yesterday 09:08 PM Join Date: Oct 2007 Location: BKK Posts: 2,467	The Times Today: Alistair Darling ignores the looming collapse of financial institutions - Times Online Alistair Darling ignores the looming collapse of financial institutions Alistair Darling's footling initiatives yesterday were a sideshow. There is one overwhelming challenge facing the business world and it is not going to be addressed by £10 million more for science teachers or £12 million for women entrepreneurs. Western capitalism is, bluntly, being haunted by the spectre of a catastrophic domino-like collapse of financial institutions, one that if not prevented would without question lead to an economic ice age. Mr Darling did at least acknowledge that a number of credit markets were “barely functioning” but then moved on to more trifling matters. Outside Westminster, however, fears remain that a major financial institution is close to collapse, or that policymakers at least believe it could be. Nothing else explains Tuesday's co-ordinated campaign by central banks and their increasingly desperate measures to pump more liquidity into a system showing fresh signs of paralysis. As one senior City figure put it yesterday: “There's the smell of death all right but no one can locate the corpse.” En masse, the world is de-leveraging. On an individual level, moves by banks to call in debt and tighten loan conditions make perfect sense. Collectively, they could be devastating. Asset fire sales lead to falling prices which lead to shrinking collateral values and the need for more fire sales. It would not take all that much to tip the credit markets from the current state of paralysis (bad) to panic (much worse). ...And so it continues. Maybe I should start a poll - which Bank to go bust first (obviously excluding NR and the ones that already have...)

16-03-2008, 08:39 AM	#45 (permalink)
Butterfly Suspended Member Join Date: Mar 2006 Posts: 10,318	My bet would be for UBS to go down, but which branch I don't know,

17-03-2008, 11:50 AM	#47 (permalink)
Butterfly Suspended Member Join Date: Mar 2006 Posts: 10,318	yeah, something strange, I mean 98% that's not a fire sale, it's a rape sale

17-03-2008, 12:03 PM	#48 (permalink)
bkkandrew Clingin' on... Last Online: Yesterday 09:08 PM Join Date: Oct 2007 Location: BKK Posts: 2,467	^Yes, my man at JMP opined that if the deal wasn't done BSC would have gone Chapter 11 and possibly brought down JPM as a result, as they are by far and away their biggest trading partner and have massive exposure. The FED are essentially lending JPM the money ($30BILLION) to protect the money that they (JPM) are owed. Nice to friends like that eh?

17-03-2008, 12:14 PM	#49 (permalink)
bkkandrew Clingin' on... Last Online: Yesterday 09:08 PM Join Date: Oct 2007 Location: BKK Posts: 2,467	Meanwhile back in the UK, HBOS looks down the back of the sofa for some spare cash...: HBOS raises £750m of new capital in a bid to beat credit crunch - Times Online HBOS raises £750m of new capital in a bid to beat credit crunch Iain Dey, The Sunday Times HBOS has raised £750m of new capital at a staggering interest rate of almost 9.5%, in a clear sign of the funding crisis facing the world’s banks. ...Cont... 9.5%....!!!!!!!!!!!!!! Why didn't they just put the dosh on someone's credit card? They would have got a better rate than 9.5%... Maybe all the Director's cards were maxed out.

17-03-2008, 12:19 PM	#50 (permalink)
Jet Gorgon What the Dormouse Said Last Online: Yesterday 02:25 PM Join Date: Apr 2007 Location: Rabbit Hole Posts: 5,828	Actually, I like how JP did the deal on a Sunday with the Fed trimming 25bp from its interbank rate, also today, a Sunday. A little morning cheer when Wall Street opens tomorrow?

17-03-2008, 12:38 PM	#52 (permalink)
bkkandrew Clingin' on... Last Online: Yesterday 09:08 PM Join Date: Oct 2007 Location: BKK Posts: 2,467	^Don't know about cheer, but to avoid a 10-20% drop, suspension of trading and a rout of the USD. Wall Street futures are still showing -2.3% on Tokyo, despite their paniced actions..

17-03-2008, 12:41 PM	#53 (permalink)
Jet Gorgon What the Dormouse Said Last Online: Yesterday 02:25 PM Join Date: Apr 2007 Location: Rabbit Hole Posts: 5,828	^ But, Spin, that's a stopgap bennie for JP. The Fed mtg is Tuesday, and it'll likely lower rates to about 2%. Pity the seniors living on savings and investments. I think Binky is hoping he can drown in his hot-tub tonight.

17-03-2008, 12:42 PM	#54 (permalink)
Butterfly Suspended Member Join Date: Mar 2006 Posts: 10,318	all is well, there is no need panic, everything is fine