Since those who do this for a living aren't answering my questions appropriately (and you know who you are Clamato!), is it time to jump into financials?
Say, do I take a chunk of money and spread it out over 10 financials?
My reply that buying them...Merrill Lynch in particular...was it really that confusing you absolutely horrible driver? BTW, all of my conversations are recorded. Give me a time and I'll play it back for you. I like doing that because listening to those conversations makes me laugh. I am that funny. And I know it.
Originally posted by Clamato: My reply that buying them...Merrill Lynch in particular...was it really that confusing [snip]?
Ugh, yes. It was confusing, just like this sentence.
And I asked if it was something you could legally talk about...you said yes as you have no information in equities as you do not trade them nor are you involved in any way with them. Jerk! I already sense that tonight is going to be real fun...yep, real fun.
So who is the biggest swingin' d**k on Wall Street today? Jamie Dimon, that's who! Bear built a $1 billion building last year and today, Jamie Dimon buys the whole business for $270 million, and with the Fed's money! Amazing. Next up? Lehman. Not sure who can bail them out. Arguably, Lehman poses greater counter-party risk than Bear. Oh, and the funniest thing I read over the weekend: the press contacted Jimmy Cayne over the weekend while he was playing bridge. He didn't have any comment. I mean, geez, would you comment if your $1 billion of Bear stock (last week) was worth about $10 million today?
And what about this Fed. Another 100 bps cut rumored for Tuesday. Since when is it appropriate to try and fix a solvency with liquidity?
Originally posted by Hyoog: So who is the biggest swingin' d**k on Wall Street today? Jamie Dimon, that's who! Bear built a $1 billion building last year and today, Jamie Dimon buys the whole business for $270 million, and with the Fed's money! Amazing. Next up? Lehman. Not sure who can bail them out. Arguably, Lehman poses greater counter-party risk than Bear. Oh, and the funniest thing I read over the weekend: the press contacted Jimmy Cayne over the weekend while he was playing bridge. He didn't have any comment. I mean, geez, would you comment if your $1 billion of Bear stock (last week) was worth about $10 million today?
And what about this Fed. Another 100 bps cut rumored for Tuesday. Since when is it appropriate to try and fix a solvency with liquidity?
It's funny. If my business starting going down the tubes because of mismanagement or my neighbors milling company started going down the tubes because of mismanagement...or this Village started going down the tubes because of mismanagement, is anyone going to step in and come to the rescue?
What a joke.
Where were the Feds when Adelphia and Enron collapsed? Or do they only care about the big shots on Wall Street?
Clamato - see what Hyoog said....Lehman...I hate you for making me abandon my short on Lehman. HATE YOU!
He'll concede your LEH point if you also show a little gratitude for keeping you out of the other financials you wanted to buy. BSC looked mighty cheap last week. Take a look now.
And as for why the Fed would step in when a major player in the finance world is in trouble, you need to assess the risk of the entire system as a whole. Counter-party risk. It's not an issue of just 1 bank failing, but the stress that puts on every other entity who has an open position with them.
The other 2 companies, while catastrophic for their shareholders, are of minor significance when compared to the shear number of people who would be affected with a roiling of the credit markets.
Ok, I've had more time to digest all this. My numbers were off. The JPM purchase price is $236 million at $2 bux a share. The other thing I said about Lehman is up in the air. Lehman is, by far, a much bigger counter-party than Bear when it comes to CDO's and derivatives. But the thing about Bear is that their liquidity drain was through their Prime Brokerage business, something that Lehman doesn't have much of.
Whoever had shorts on all the banks and brokers 1-2 weeks ago should be in great shape. CDS (credit default swaps) on all the banks/brokers have widened out pretty dramatically.
For those of you following all this, a funny and decent informational website is dealbreaker.com
They're like a Wall Street tabloid that operates on anonymous tips from traders, analysts and portfolio managers. They have accurate info on the scoop before it hits the high-minded WSJ and NYT. They were calling on the demise of Bear last summer.
BOOYAH Clam from the South Side.......good stuff....
DTM, National City took on a bunch of shitty loans. I know someone who was buying a townhouse up on on Swift south of North Avenue. The bank WAS going to be National City.....They called her on the next Monday and said it was some other bank...
I'm not sure it has anything to do with NatCity's underwriting standards -- I think it has more to do with their appetite for mortgage-backed CDO's. Its basically a securitized (by mortgages) structure which generates a return based on the pool of assets it owns, in which case its sub-prime type mortgages which have a high rate of default. If the underlying mortgages default, the return of the CDO/CMO (collateralized mortgage obligation) goes down and the equity NatCity had invested in it becomes toast.
The events in the news should not be mistaken for poor underwriting standards b/c 90% of loans made by banks are sold and re-sold to other banks. In many instances, they're packaged into CMO's (by shops like Bear Stearns) and sold as an investment vehicle to banks. As the assets of the CMO's become worthless, the money the banks invested in them simply goes poof ...
The lesson is that certain assests should not be securitized: (1) high yield corporate debt (2) mortgages; and, (3) car loans. Yet over the past few years, everyone's tried to generate yield in every which way possible and CDOs/CMOs & CLOs all offered a nice alternative. Until now.
