I have a graphic for that too. lol
Posted on 03/17/2008 6:41:36 AM PDT by Lazamataz
To everyone who called me or emailed me over the weekend saying, "How could this happen? How could Bear Stearns go from $57 to $2 in two days?" I would offer the comment of one astute trader, who said, "When you are levered 30 times and have no access to finance it doesn't take a huge move on $400 billion in assets and $260 billion of debt to wipe out the equity."
Two questions dominate the Street this morning:
1) What will Bear Stearns' shareholders--specifically Bear employees--do? The $2 per share deal is subject to shareholder approval, and Bear employees--many of whom have significant parts of their life savings in Bear stock--are certainly stunned enough to create at least a minor protest over the price. Sandler O'Neill noted that "we do not believe it is incomprehensible that this deal may have bought Bear Stearns additional time to assess its situation which may lead shareholders to reject the offer."
2) What will happen to the other major brokers and banks, and what will the reaction of the credit markets be? With a book value at nearly $80 per share for Bear, the $2 price makes it tough on other brokers. A flight to firms with the strongest balance sheets seems obvious. Analysts were out this morning with various comments on who does have the strongest balance Goldman Sachs , for example, opined that Morgan Stanley and JP Morgan had the strongest balance sheet. Street seems to be treating it that way: Lehman down 28 percent pre-open, Merrill down 16 percent, Goldman and Morgan Stanley down down 8 percent, JP Morgan up.
Meredith Whitney, who has become an ax in this space through her coverage at Oppenheimer, put out a note this morning titled, "BSC Fire Sale to Cause Valuation Adjustment for All Financials: Banks at Risk," in which she argues that financial stocks have further downside of as much as 50% based upon 1990/1991 multiples of tangible book values. She says most banks are trading well above their price to book lows of the 1990-1991 cycle.
So, what will finally end all this turmoil? The Street is screaming that the government should directly or indirectly begin buying mortgage backed securities, and, to a lesser extent that a wider bailout program needs to be devised to stem home price depreciation.
Actually no, you didn't. What you said was "depression".
Really? I said that, too?
fyi:
Estimated costs of BSC deleverage... $6 billion!!....
http://seekingalpha.com/article/68717-official-presentation-jp-morgan-acquiring-bear-stearns?source=wildcard
LEGAL INSIDER TRADING IN THREE EASY STEPS, BROUGHT TO YOU BY JP MORGAN AND THE SECKEVIN WILSON, MARIA CHRISTINA PADRO, JULIAN ASSANGE & staff Monday March 17, 2008
A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing 'how-to' programs and even client service divisions to help well-heeled clients circumvent insider trading regulations......
ping to post #264...forgot to include you.
Something to the effect that rallies precede depressions. I thought that was phunny. When was the last time you experienced an economic depression?
What I think is "phunny" is your desperate attempt to invent, out of whole cloth, something I never said and attribute it to me.
Okay, I've responded to your comments twice, and backed up my responses. If you want to call me naive, how about backing up your claims?
I can do better than invent it. I can show the post where you said it.
The market also rallied before the Depression.
222 posted on 03/17/2008 3:05:38 PM EDT by nicmarlo (A vote for McRino is a false mandate for McShamnesty)
To: groanupThe market also rallied before the Depression.
A recession is borne out by statistics after the fact. The reality of a recession is brought out by anecdotal evidence, during the fact.
And statistics can show whatever someone wishes it to show....especially since .gov has altered how things are measured from time before.222 posted on 03/17/2008 3:05:38 PM EDT by nicmarlo
Which was in response to this comment, by you:
To: ToddsterpatriotThe Dow is actually up at the moment. DAMN! WE’RE NOT GONNA DIE!
220 posted on 03/17/2008 3:03:45 PM EDT by groanup
From which you made up, whole cloth, the following, and attributed it to me:
So are you predicting a recession based on today's rally?
To these nut cases, everything is the illegals fault.
After you posted the overtly obvious fact that the market rallied before the Depression you then posted this quote:
A recession is borne out by statistics after the fact.
So is a rally before the Depression a statistic or not?
The above distortion of my comment was ANYTHING BUT "merely asking me if I was predicting a depression based on today's rally." It's called putting words in my mouth and dishonestly mistating what I said.
So when dp we get to say the manure had hit the wind moving machine?
I have a graphic for that too. lol
The ‘bear’ in Bear Stearns is so timely.
haaaaaa!
I might have to steal that...could come in handy one day. : )
Go ahead and take it, I think we’re all gonna feel like that before it’s over with.
ty, Aqua. I think we’d better be loading up on bandaids, flour, sugar, coffee, non-electric devices.....lol.
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