The Thailand expat forum for Travel, Lifestyle and Fun.

Butterfly

well technically, foreign corporations with a US presence are usually US registered companies, so they deserve to be bailed out also. However I doubt those companies could import from their overseas operations the bad loans and ask money for it from the US government. I am sure some will try, but regulators will be looking at everything very carefully.

Butterfly

Your post above is not evidence, just authors expressing an opinion about the situation, and yes I do agree with what they say. The system didn't collapse as you predicted, that was another of your extrapolation.

Markets have a tendency to over-react mostly because of the role of speculators to create liquidity. This excessive reaction can create silly situations like we have now. It's not like there is 100% of default on those financial instruments, just that there is no market for trading them because the speculators have left the building. With reporting requirements asking financial institutions to report their positions as "marked to market", they have no choice but to unload them or take a charge for them, and these are huge. It doesn't mean the investment loss have been realized, just that they lost some type of book value and that needs to be reported. The public is always confused by this, and so are the speculators who more often than not have no "formal" education in understanding risk of complex financial instruments. They trade on short term technical inefficiencies that reverse eventually. The Bailout will create liquidity in those instruments, as speculators have all gone in panic mode for speculative reasons.

Butterfly

He has a few good points, however Icahn is himself a bit of a nutcase, with very unreasonable demands from management and has been shown to be unstable in many instances when he lost his battles. He is a loose cannon. He wants management to "serve" the shareholders first, not their customers or the board. The problem is management is nominated through the board, not shareholders (unless there is a proxy war), so management have to report to the board first, before shareholders.

Milkman

Here is Ron Paul (who's been prescient) talking about the current state of economic affair on September 18th, 2008.

Should we start a new "global downturn/correction" thread, or make a new "US downturn meltdown thread" or put everything here? What do posters think?

Anyway, here it is:

bkkandrew

^Sorry MM, I have been away for a few days. Normal service will be resumed on this thread from Monday next week.

I note that the signs are now that the Mother-of-all-bailouts is too little, too late and doomed to failure. Those signs include the falling dollar, commodity pricing in dollars all over the place and financial stocks falling back to pre-MOAB levels.

There is now no doubt in my mind that the US financial system will collapse and, as the FED has now tied into so much of the system with their guarantees and direct funding, they will be dragged down too. These past 5 days (post MOAB announcement) have merely been a postponement and a false dawn.

who

Well I must say you certainly don't seem to be afraid to go way out on a limb with your predictions (I count six). I hope that one of them turns out to be true.

bkkandrew

^Which one?

who

bkkandrew

^As you are a disbeliever, I guess it is:

who

No it's not n s w b r o n t t f m it's m o a b.

But as I watch CNBC I wonder if there will be a b.

bkkandrew

^Mother-of-all-Bankruptcies?

who

Probably not, but maybe.

Butterfly

well 1 out of 6 wouldn't be too bad, hell a monkey can do 1 out of 2

bkkandrew

Bank run in Hong Kong:

Hong Kong Savers Fret as Bank East Asia Fights Rumors (Update2)

By Kelvin Wong and Theresa Tang




Sept. 25 (Bloomberg) -- For the first time since the Asian financial crisis more than a decade ago, Hong Kong has faced a bank run.

Hundreds of depositors lined up at the city's third-largest lender Bank of East Asia Ltd. yesterday as the bank hit out at ``malicious rumors,'' and Chairman David Li rushed back to Hong Kong from the U.S. to reassure clients and investors. The city's central bank jumped to BEA's defense and police said they're investigating phone text messages questioning its health.

Continued here:

Bloomberg.com: Asia

Spin

^ Just when you thought it couldnt get any worse!.............

JPMorgan Chase May Acquire Washington Mutual After FDIC Seizure

Sept. 25 (Bloomberg) -- Washington Mutual Inc. may be seized by regulators later today and parts sold to JPMorgan Chase & Co. in what will rank among the biggest banking failures in U.S. history.

The Federal Deposit Insurance Corp. plans to take control of Seattle-based WaMu, the biggest U.S. savings and loan, according to the CNBC television network, and New York-based JPMorgan will buy deposits and branches, the Wall Street Journal said, without citing any sources. The FDIC insurance fund is not expected to contribute any money, the Journal said.

WaMu's fate played out as Congress tried to reach an accord that will ease the global credit crunch, which has already driven Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business, and Bear Stearns Cos. and Merrill Lynch & Co. into hastily arranged rescues. As many as five banks had considered bids for WaMu without making an offer, balking in part because the lender faced as much as $19 billion in mortgage loan losses.

Resolving WaMu's situation ``is a positive,'' said Patrick Becker Jr., who oversees $2 billion as chief investment officer at Becker Capital Management in Portland, Oregon. ``That's been a big cloud over the market and financial shares.'' His firm does not own JPMorgan or WaMu shares.

WaMu and JPMorgan officials didn't return calls seeking comment.

Five banks that were considering bids, including JPMorgan Chase, have failed to make an offer in the week since WaMu put itself up for sale. WaMu also approached Carlyle Group and Blackstone Group LP, two people briefed on the matter said.

Deal Pressure

WaMu came under increasing pressure to strike a deal as its stock sagged and ratings companies pummeled its debt. Standard & Poor's yesterday cut WaMu's rating for the second time in nine days, dropping it to CCC from BB-. WaMu's regulator, the Office of Thrift Supervision, and the Federal Deposit Insurance Corp., which guarantees customer deposits, have declined to comment.

WaMu fell 57 cents, or 25 percent, to $1.69 at 4 p.m. in New York Stock Exchange composite trading. The stock skidded about 88 percent this year, the biggest decline in the 24- company KBW Bank Index. WaMu is the only junk-rated company in the index.

A record 392 million WaMu shares changed hands today, more than twice the daily average this month and seven times the average over the past year, Bloomberg data show.

linkage
linky

So just a few hours after the world biggest bank failure we have another one that is nearly as big.

I've been following Wamu as a possible long term investment for quite some time. Bloomberg tv has a guest on qite often who sang the praise of Wamu religoeusly. His name is Charles Lemonides and he's Chief Investment Officer; Valueworks LLC

Around the start of September he was interviewed on Bloomberg tv he recommended wamu a buy at 4$ because following

"In Washington Mutual, you're getting in there at less than 10 times this year's earnings estimate. Earnings are going to be growing if not 10 percent, 15 percent, over the next two years. If you're in there at less than a double-digit multiple, and you've got 15-percent earnings growth going out, I don't see how you get hurt.”

Now, a few weeks later Mr Lemonides is saying the following

“There’s a very good chance that they are the next one to fail,”

Butterfly

^ actually FDIC will not even be involved, the bank got transfered already

Spin

Shotgun wedding?

Butterfly

^ shotgun wedding are actually the best, it's when they marry for love that everything goes wrong

see AOL and Time Warner for a good example, they married for love, and they got fucked, now in divorce proceeding

bkkandrew

^JPM (Well JP Morgan, Chase & Co, Bear Sterns, WaMu) will soon be wedded to every financial firm in the US, which will make a nice and tidy bankruptcy, sort of a one-stop-shop bankruptcy of US Inc.

Spin

STOCKMARKETS RUNNING OUT OF UNDERPANTS

FINANCIAL institutions across the globe last night urged the US to agree a bail-out package, warning they are down to their last four pairs of useable underpants.


With traders soiling themselves every time the headlines change on the BBC website, offices in New York and London are now dangerously awash with urine.

Bill McKay, facilities manager at City brokerage Madeley-Finnegan, said: "It's soaked right through the carpet."

He warned the entire financial system was on the brink of collapse, not because of liquidity problems, but because the wiring is 'absolutely drenched'.

"I was called out at 3am after a small electrical fire broke out on the fourth floor. I took one look and thought, 'stockbroker piss'.

"We tried putting down newspapers but they just read the headlines and piss themselves all over again."

McKay added: "I was talking to one broker when a car alarm went off in the street. Within seconds there was a large damp patch spreading slowly across his groin.

"We've turned the first floor coffee lounge into an emergency laundrette, but for every clean pair we send out there's two dirty ones coming in."

Last night the Bank of England urged brokers to hold it in or at least keep a bucket under their desk.

Daily Mash