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Discussion in 'Current Events' started by Teh Don Ditty, Mar 17, 2008.
The Bear Stearn's Building itself is worth more than $2 a share.
Hopefully the sectors outside of the financials will stay green.
Either way its going to a an ugly day on wall street.
That's what happens when there's a run on the bank.
In less than a week, the creditors put it out of business...
Where's George Bailey (its a wonderful life) when you need him?
This has been on the news all morning, pretty incredible to see such a big and respected name tumble so severely.
Big, but not always respected. The management at Bear Stearns was questioned even before this latest meltdown. Still, a pretty remarkable event. As mentioned above, their headquarters building in Manhattan is worth more than the buyout price, which tells you what JP Morgan Chase thinks they are getting for their money -- a gigantic boat anchor.
Since that's 30 *BILLION* of the taxpayers money, does that mean we all own Bear Stearns (as well as JPM) now?
Anybody remember how well the S&L bailout went down? Have we learned nothing?
How much will the Stearns execs make in return for pooching their financial institution? (hint: you'll likely need a calculator that does scientific notation)
You should come be a UK tax payer, we own £100bn ($200bn!!!) in Northern Rock debt, and that's between a population of 60m vs your 305m
ahhh, the finance world is doing just spiffy.
Actually, the execs get screwed in this deal.
BS had a no golden parachutes clause in the event of takeover.
They basically have whatever they get for their shares, which is a fraction of what they were worth even last week.
All employees combined owned 30% of the company, and that collective value has toppled from $14 billion to $22 million in about a year.
The executives only owned about 9%, meaning their entire stake in this deal is around $8 million. There are single CEOs who've gotten away with more than that for running a company into the ground in the past...
Not sure what you mean by "went down," but it did prevent the financial markets from disintegrating. The S&L bailout stunk, but the alternative could have been worse. A lot worse.
This is where corporate governance comes in if you ask me.
That is right, I don't believe there is a golden parachute waiting for them but if you follow the news and the SEC filings you'll soon see they've already collected their tens (sometimes hundreds) of millions.
As for the announcements, just another one to go down. Sub-prime doesn't exist any more. It will again one day in another form as there needs to be an outlet for people with good credit but high debt to income ratios or bad credit and higher debt to income ratios. And no, we didn't learn jack from the S&L crash.
Woah, Lehman Brothers has dropped over 30% in share value Morgan Stanley is down 10%. Freaking hell.
meanwhile, the Fed is accepting questionable debt in exchange for cash so that the other financials can remain liquid.
Who's going to bail out the Fed itself (or will it just keep printing money?)? By which I mean, when will the U.S. be considered a "counterparty not to be trusted" by the other central banks of the world?
Just noticed that?
There has been talk that other firms might go the way of Bear Stearns.
Yeah, the font office monkeys analysts were having a little freak out about it while I was down there a moment ago.
According to Bloomberg..."Cayne ranked as Wall Street's richest CEO, with $1.3 billion of assets, according to Forbes magazine's 2007 billionaire survey. His stake in the firm approached $1 billion last year when the shares reached their peak price of $170. Under terms of the JPMorgan takeover, his holdings are now worth about $12 million."
Teehee monkeys. Monkeys are fun.
It's been a hot topic over here at Cap1 as well. Sucks to be a stock holder of any of those companies right now. There's no guarantee that they will ever get back up to where they once were.
Understood. Choosing the "less horrible" path is difficult, and ends up horrible either way. A tough spot to be in.
It's debatable whether or not the federal government should be bailing individual companies out at all. However, that's not really what annoys me. What riles me up is a combination of the "mismanagement" of funds whenever the government throws financial assistance at something, and the seemingly perpetual state of white-collar crime. ..and wouldn't you know it, the headlines are reading like we've got a heaping portion of both today.
You have people at the top skimming cash and trying to cover their tracks. The S&L bailout was a good example of this. (ie: The Keating Five)
The bailout itself may have been a well-conceived idea, but it's the white-collar criminals who abused it. Arguably, such shysters are what put us in such predicaments.
Combine these folks with our GOV's impressive inability to oversee the mountains of cash they shovel onto crises and you get the perfect s**tstorm. (How's the government's approval rating regarding NOLA or Katrina again?)
As for the Bear Stearns execs getting nothing out of the takeover. That's true, on paper. The sale doesn't even give them full market value for their stock (which is in the crapper). However, I'd watch for the top brass to end up with a little something extra after the cliche umpteen millions of the government's (well-meaning) aid gets "misplaced".
Anyway, I'll sit down and put my tinfoil hat away. Maybe I just need to go for a walk or something. lol
Hey Teh Don Ditty, did you see any of the BS folks over at Mulcahy's???
I'm at Moran's and didn't spot anyone! LOL
Surprisingly, the market ended up today despite all the bad news. It could be a sign that we're near or at a "bottom". When there is a waterfall of bad news and stocks won't go much lower may mean that we're at the trough.
I'd still ask them to buy me drinks because I'm sure they still have some money left.
I was kinda surprised that the market ended up. However, I still don't think we're done with all this mess.
Agreed. More shoes to drop, in all probability. Some of the other investment banking firms are also considered vulnerable. The markets are probably reacting to the Fed's more proactive response to this week's financial crisis, and also in expectation of another huge rate cut.
I just hope there's no more bad news for a few days, so we get a bit of a rebound. Luckily most of my stuff's in the Eurozone so the drop in stock prices is offset by the currency's rising value, but even so it's not a good time to be an investor
I hope you're right but don't think you are.
Very glad my financial advisor and I moved a lot of my retirement monies into overseas funds. THey've kept me from being really down YTD.
Lehmans is seen as the next likely shoe to drop. Also, the bank (Washington Mutual [WM:NYSE] and Citibank [C: NYSE]) stocks aren't doing all very well either. We might be seeing some more consolidation in that sector. IMHO.
All the banks have been hammered AFAIK but it seems like the investment banks are the ones with their backsides really hanging out. Consolidation -- isn't that a polite word for going out business?