WaPo: Treasury and Fed Assisting in Sale of Lehman
Submitted by
CalculatedRisk on Thu, 09/11/2008 - 1:50pm (183 comments)
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Whatt!!!!
First.
I can haz subsidized bailout
Do you think he gets paid for overtime ?
I wonder if they will halt the stock tomorrow. I'd call this pending news ...
Best to all.
"merger monday" have changed to "bailout sunday"
LEH briefly fell below $3 in the AH market.
And damn Scottrade wouldnt let me buy any today...
I figured the gamble was cheaper than driving to Vegas
.....
Wow. Good job we have, like, free markets 'n stuff, and our government doesn't interfere. Our business leaders deserve the compensation they get for managing these risks!
Oh. Never mind.
In July, Miller's Legg Mason Capital Management and its affiliates increased their position in Freddie Mac to nearly 80 million shares. It was a disastrous bet, following failed investments in Countrywide Financial (acquired by Bank of America (NYSE: BAC)) and Bear Stearns (acquired by JPMorgan Chase (NYSE: JPM)).
Miller also made a heck of a call on Lehman.....retard!
The scary part is they'll actually find someone to buy.
So we'll get our usual XLF short squeeze on Monday morning?
"Bailout Suckers of America"
Who??? BofA???
Who is prospective suitor?
Good news.
Think of it this way, without the gov involved, it goes to bankruptcy court and gets really really messy. We don't want the economy just to crumble, regardless of how bearish your portfolio.
With the Treasury involved we can now implement a JPM/BSC deal where a bank can safely take on those assets(read: liabilities). I would favor a Japanese bank taking the deal or HSBC. Giving Lehman to GS or another competitor just starts the clock all over gain. HSBC has lots of deposits to draw on. Nomura, as a Japanese bank, will never have to mark anything to market. Whallla!!! The problem securities at Lehman disappear from the marketplace.
the CDS can never be paid, so these fins' can never go to bk court
There go those Lehman jobs...
I am but a lowly taxpayers. I do not make billions or even millions of dollars a year. I do not have tax shelters. Nor have I moved off shore.
I am in the middle class. My government has seen fit to waste my money. One bailout after another. More of my taxpayer dollars misused.
When my government looks to me to support major American corporations who have made billions in profits and now are mired in debt, I wonder why? Am I a source of wealth for the wealthy?
And when I am broke and can not support myself. Whether made so by poor judgment or my government's foolishness, where will I turn?
Who will bail me out?
Whuh Buh???
Will the Fed backstop every company that fails? This is truly fucked up. Why should my tax dollars go towards paying wall street bonuses?
Lehman took incredibly stupid risks. If there is financial fallout as a result, so be it.
Why should my tax dollars go towards paying wall street bonuses?
Read this short wiki clip:
To Serve Ma - Wikipedia, the free encyclopedia
...
Five little Investment Banks knocking at death's door;
One got into a pelt and then there were Four.
Four little Investment Banks going out to sea;
A red herring swallowed one and then there were Three.
...
(I can't wait til the third gets Lynched)
turned into a pelt...
One bailout after another. More of my taxpayer dollars misused.
Ella, Ella, Ella. It's not your tax dollars; it's those of your descendants.
Your tax dollars were already spent, more than 30 years ago.
I suggest you relax and go shopping. Preferably with a credit card.
What does anyone think of the prospects for the financial equities (XLF) should come financial company be given favorable government terms to buy the good parts of LEH, or some such nonsense...?
When they keep bailing out financial firms like this, it's going to be hard not to bai out GM when it is going bankrupt.
Wonder what this will cost us..another $29 billion put up to 'buy' a pile of stinking worthless assets?
BTW, anyone got the latest value of the pile of Bear Sterns feces we all own?
So they pass a bankruptcy reform bill for consumers to ensure that we pay this tab? Nice.
From the bottom of the last thread, but more appropos here:
I don't believe it for a second.
In the DC world, Ben and Hank have both signaled that LEH is to be thrown to the lions, as a sacrifice.
I put this in the same category as KDB and Nomura buying them. I think the reporters got used.
Nemo,
True. But do the lions at the gates know that my tax dollars have already been spent?
From where I sit they and the vultures look awfully hungry. I wouldn't be so worried if they weren't fixing their hungry gaze on me.
We know how the Fed/Tres wants this to work . . . release the details of the deal on Sunday and get a nice pop in the market on Monday. But the cat is out of the bag early, the Fannie/Freddie bailout has not yet been digested, and these shenanigans produce diminishing returns each time. Given these realities, am I a fool to think SKF is a good buy first thing tomorrow? (i.e. the market will finally reject these kind of efforts?)
"pclema writes:
When they keep bailing out financial firms like this, it's going to be hard not to bai out GM when it is going bankrupt."
What can I say? Large and regular campaign contributions probably bring the best return of any investment.
@particle9:
Yeah. Where is the credit card bailout? Where is the student loan bailout? Relief for the nobles but not the serfs.
******BBQ, Beer and Bailout Bash*****
When: Saturday til ?????
Where: Hank and Bennie's house of the rising sun
Bring: Just your sense of desperation and untold billions of dollars!***** (no journalists or bloggers with teeth allowed, please)
*****C'mon counterparty people!!****
So much for the "good bank / bad bank" theory.
On the other hand, I guess it was half right.
Meridith Whitney's new "severe downturn" call in Fortune today says it all:
NEW YORK, Sept. 11 (UPI) -- Economist Meredith Whitney, who has called a few shots in the past, said the global financial crisis is far from over and will get worse.
"What's ahead is much more severe than what we've seen so far," Whitney was quoted as saying in Fortune Magazine, MoneyNews.com reported Thursday.
Her "biggest concern," she said, is that her estimates of the crisis "are way too low."
Whitney, an economist at Oppenheimer & Co., has been right in the past, predicting the mortgage crisis last fall and troubles at Citigroup, Lehman Brothers Holding and UBS bank, MoneyNews.com reported.
Currently, "it feels like I am at the epicenter of the biggest financial crisis in history," she said.
http://www.upi.com/Business_News/2008/09/11/Economist_warns_of_severe_downturn/UPI-45911221168552/
My take - This is NOT your father's bear market...but more probably your grandfather's or great grandfather's...(1929 all over again)
Nevie
I don't think Hank and Ben have the courage to sacrifice LEH.
I guess the government will justify the bailout by eliminating Fuld's golden parachute. Though I doubt they will even do that ... Fuld is one of their constituents and they would not want to alienate their base.
Why doesn't Bank of America just buy the whole thing and then not pay the debts?
Where is mp and conjure bag?
mp, if you're reading this, I miss your posts.
Sane-Dont do it...look at eev, smn, dxd, twm..skf is really losing it's steam..the biggest holdings are hard to nudge any lower...day trade it only....
CR, i respect your right to rule over your web site and without explanation to guests like me.
just a simple question... if you will permit me.
did MP break a rule?
You know it's interesting that the frequency of these companies augering in is increasing. I wonder if we're building up to some sort of crescendo.
Nevie,
So I should hang on to my position in SDS?.
Lehman paid out $9.5 billion in bonuses in 2007. Lehman's 2007 Bonus Pool Rises Almost 10% on Higher Revenue - Bloomberg.com
Now, they're looking for a few billion to survive. Is this insane or what?
"Where is mp and conjure bag?"
Perhaps they have found banker in his dome, and moved in. . .
Hey, maybe it's not too late to save pets.com!
Fitch downgrades WaMu to 'BBB-' from 'BBB
BAC ain't buying Lehman, they've been beavering away at shrinking their IB, why would the buy a shitty one?
Lehman have their paws all over in RE, they backstopped all sorts of regional developers, so that shoe will be falling Q4.
When WaMu goes down I wouldn't be surprised for JPM to be picking over the corpse.
cd writes:the biggest holdings are hard to nudge any lower...day trade it only..
Well said. BAC is strong; it's not going to fill that gap at 23 for a while. There's only so much WM & WBC can do to bring XLF down. (sigh)
Dogbert, that really puts it all in perspective, doesn't it? If that's true, then the Lehman bonus earners of 2007 could probably rescue the company....at least for a couple more weeks...just by returning their bonuses!
Where was Hank when JDSU fell in value 8 years ago? Damn, he could have bailed out all the dotcoms and saved all those companies that were built out of illusions. We need Hank for President, screw Obama, this guy is a National Treasure, a National resource, a guy with unlimited funds to help anyone, this is great!!!
Look on the bright side folks.
Now that the myth that fiat money is equated with work has been utterly dispelled, we can be like France - pretend to work and pretend to get paid.
Nouveau Bon Vivants.
Dogbert-shows you how much they care about the shareholders, me me me help bailout..
So far the Futures don't seem to care
keep in mind the econ. data :
PPI + RETAIL SALES tomorrow am
Ind. production Monday
CPI Tuesday
Viva la france!
Can we really afford all these bailouts.
Yes OUI can.
BTW, I'm partially of French heritage.
Can This System Be Saved? (ladies on the board will get the reference!)
I'll tell you what, these 7 years of Bush have infuriated me and convinced me that this "system" that we are supposed to be bending over backwards to save is Not Worth Saving.
I'm ready to see taxes raised on the over $250 K crowd - if they want to move out of the country, they can. Americans are too lazy to learn languages so I doubt that many would.
I'm ready to see corporations with HQs outside of the US (Bermuda, Cayman Islands) taxed as foreign entities.
I want to see estate taxes raised. There is a war on to redistribute income - from the middle class to the rich (poor are tapped out). The rich are winning, as always happens, since they create laws to benefit themselves.
I want to see single payer national health care. It has its shortcomings, but it's better than what we have now.
I want to see capital reserve requirements raised and the amount of leverage diminished. Clearly, we can't handle it. That goes for consumers too. 20% down.
OK, rant off. But our lives, our future prosperity, safe food supplies, every nice thing, is being bargained away to support "the system." Tax revenues that might support a little park or a library - gone. Or an inspector. Or even a decent restroom - it's port-a-potties everywhere now. Roads are third world. The government agencies that once held experts are now staffed by Bush true believers.
And it will get worse.
C'mon guys, you really think that BAC and WFC are at levels supported by earnings going forward (and I mean earnings AFTER writedowns)?? Do you really think they will stay at these levels as the mortgage losses mount, CRE losses spike, and economic contraction deepends?
I don't think financials are anywhere near a bottom... I just don't get your thinking... ???
(sorry, but have to say it)
So I guess this qualifies as making Lehman aid.
we can be like France - pretend to work and pretend to get paid"
come on... may be Eastern Europe 10 years ago
Oh, goddess Nemo, 50 lashes.
Paulson, Bush, et al. can bail out all the banks they want....won't matter. If the middle class take it in the pants when all is said and done the banks will have no one to business with. Perhaps all America's finance economy will be off-shored to China or Dubai.
So bail away for the short term and screw yourselves (and everyone else)for the long term. Country First!
I doubt there will be any fall out politically. Main street will never hold these crooks and liars accountable and just elect a successor who can afford a house or two to get foreclosed on and rely on his able assistant whom apparently has lots of valuable executive experience of living high on the hog with petro dollars and middle class tax dollars.
See it will all be okay cause it will all feel the same. Country First!
I don't know why you're knocking the french.
a) they don't even pretend to work
so they have a great life, make a little here and there, and spend time with our family
we here work our butts off so that we can be downsized whenever giving the CEO's fat paychecks.
and then we have the nerve to denigrate the French.
Is there going to be a bail out of every week now? The US is a officially a joke now. Americans can now get off their high horse about preaching to other countries how an economy and market should be run. Many American officials/economists couldn't help themselves advising the Japanese to take their losses but its most definitely do as I say not as I do right? Bueller? Bueller?
Dogbert, that really puts it all in perspective, doesn't it? If that's true, then the Lehman bonus earners of 2007 could probably rescue the company
Don't forget that 1/2 2008 bonuses were accelerated into July payments. They knew damn well what was coming.
"Financials" aren't near a bottom. But something like XLF so heavily tilted toward comparatively decent-looking charts like BAC isn't exactly the best way to speculate in further price deterioration, imo. As cd said, day-trade only.
When my hero "Silent Cal" sagely intoned; "The business of America is business." I don't think this is what he had in mind.
YTL,
I couldn't have said it better myself.
Phony capitalism is FAR FAR FAR worse than socialism.
I have no idea why it's fashionable to slam the French.
They live simply and are happy.
Our culture may rediscover these things in the not too distant future.
Paulson is running The American Treasury like The zimbabwe Treasury and this will gain us wide respect around the globe, i.e, America, land of chaos and corruption, where the mafia rules!
why does everyone assume there is any bailout or anything other than moral suasion going on?
JP,
Could it be because they never got the memo that both Napolean AND DeGaulle are dead?
ades "And damn Scottrade wouldnt let me buy any today... "
Oh, don't you worry. By Sunday you'll own plenty of LEH.
Upside ? Don't lose any sleep over thet.
ever since they wouldn't let us use their airspace to bomb Kahdaffi, they have to drink outside.
Nemo LOL
Perky Sarah Palin says: "When your are stuck with a Lehman you can always make Lehman aide...giggle giggle "
Hi, Hank,
Can I go home this weekend, say, just for a few hours?
My wife is not picking up the phone and her cell is turned off. I'm a little worried.
Just for a few hours. I promise.
Sue (capital S)
look it from their side.
what you fail to understand is that 1 or 2 % of the population owns about half of everything you see around you...stocks, land, securities etc.
i'm sure you can see their point
you and i are tenants here,
relatively speaking they view the great masses of people here as a labor resource to be managed
if you play your cards very well and work the system and produce the goods and services that propel your net worth to a level where you are admitted to the inner circle, then you can decide
until then dont push that 1st amendment thing too far
all this is being observed
And when she is done making Lehman aide, she can make war on Russia. Or so she said today.
Comrades Bush, Paulson and Bernanke Welcome You to the USSRA (United Socialist State Republic of America)
RGE - Comrades Bush, Paulson and Bernanke Welcome You to the USSRA (United Socialist State Republic of America)
Right on the heels of nationalization of Fannie and Freddie we now get these assclowns hlping Lehman to further the USA into the USSRA (the United Socialist State Republic of America).
Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill of $300 billion ( and growing even more ).
Vote McSame if you want to turn America into the USSRA banana republic.
Treasury Lawyer, you think that I chained you to your desk for nothing.
We do not torture here at treasury.
Hank
“I don't think financials are anywhere near a bottom... I just don't get your thinking... ???”
ShortCourage | 09.11.08 - 6:39 pm | #
I agree 100%. This will not end well!
Fundamentals always win out in the end.
another fed sponsored rescue! Let me guess, dollar rallies huge again and metals get killed, cause you know, this all makes investors so much more confident in this current environment and in good ole America!
Fundamentals always win out in the end.
Just whose fundamentals? The GAAP? FASB?
Anonymouse --
My own strategy is to be long the XLF and short the garbage. I don't trade.
Seems to be working OK so far.
Anonymouse writes:
"Financials" aren't near a bottom. But something like XLF so heavily tilted toward comparatively decent-looking charts like BAC isn't exactly the best way to speculate in further price deterioration, imo. As cd said, day-trade only.
I'm no genius trader, but I feel safer placing longer-term bets on financials, even (or especially) companies like WFC and BAC. Look at a chart of WFC's stock price since 1995, and you can see that it's been elevated to bubble levels during the credit bubble. Looking at the past 5 years of stock price history is not sufficient context to what could happen. Yeah, so it (and other strong banks like BAC) have fallen a LOT already. They still have a LOT further to fall, simply because the environment will be a credit contraction, coupled with a nasty recession, going forward.
Cheap cost of capital may help strong financial companies going forward, but I just don't think it will make up for the contraction in the economy and the mounting losses on existing loans.
Somewhat off topic, any idea what has happened to the $60 billion of CFC dog poppie that they exchanged with the Atlanta Home loan bank for hard currency? I have a sneaking suspicion that those old CFC obligations will disappear, probably as arranged when BofA bailout out CFC, and the debt will secretly be transferred to the taxpayer.
Methinks, 'tis time to go out and buy a glod coin or 2.
Oh, and Ike is now headed for Houston on Saturday, unless he changed course in the next couple of hours.
Nemo writes:
My own strategy is to be long the XLF and short the garbage. I don't trade.
Yeah, but some here may not understand that's essentially going long BAC and short crap like WM & WBC. SKF is like 200% inverse BAC (not really, but BAC is what's keeping XLF up)
"Who will bail me out?
Ella | 09.11.08 - 6:13 pm | #"
your local politician will.
from a commenter at The Oil Drum
"... we clearly have a Mafia let loose now, and they will stop at nothing.
In some ways this is like the fall of communism, when the idea became clearly bankrupt, as much of the patterns of capitalism have been fatally corrupted, and it would be dishonest of me not to recognize the severity of the flaws which are wrecking destruction.
Still, I suppose astute commentators as diverse as Adams and Jefferson recognised these dangers centuries ago.
CR,
What are your thoughts on the the gazillion bailouts? Below expectation, meets expectation or above expectation?
I think Sunny Jim owes too much to bail me out.
Agree with Shortcourage. Financials are going down. But I'm not shorting BAC or JPM
Sigh, the hub & I paid off the mtg.
Maybe my car loan could be bailed out?
Or the pitifully small amounts we owe on credit cards?
chophouse, unregulated capitalism create predator capitalism. Greed is always self destructive. Too bad it will likely take the rest of us with it.
I'm going home. Nitey nite, everyone, and I still want to know where mp is. Maybe on vacation?
Everybody should take a grand outta the bank today. Any bank.
Sniggle-That's a done deal with federal banks getting into taf via fnm-freddie rescue..
short- I was saying bottom on financials but I've noticed that SKF seems to have big hands wrapped around it now and any mention or news of bailout or rescue leads to mind bending reversals..If you can't watch it like a hawk..a big gain can disapeer in seconds..
after this believe me I'm looking for a way to short america...
Hello Japan.
OK who's next after Lehman, not counting banks.
I wonder if the rosy predictions for deficits included Moodys style stress tests used on CDO ratings? Think they projected what receipts come in like with say 10% unemployment ?
OK who's next after Lehman, not counting banks.
Merril. They would have been the big story today, but they go swamped by LEH.
pclema writes:
OK who's next after Lehman, not counting banks.
MER.
"Do you think he gets paid for overtime ?"
They call it overlord time.
Well, there are some folks who can afford to buy LEH, and still have mucho dinero left over. I think maybe they should be required to buy it.
Global systemic financial meltdown...we are seeing the carry trades unwinding as countries around the world are cutting rates because their economies are going into slowdowns...dollar strengthens so it cuts US exports...yen strengthens as carry traders buy back yen they shorted which damages Japan's exports...Eastern Europe is exposed to heavy foreign currency debt and will have a hard time paying that back as their currencies weaken.
KnotRP
There are some folks who can afford to buy LEH. Concur and if they don't then I think we should hit them with RICO and take every dime they have.
I can't help but value everything in aircrat carrier equivalents: Nimitz class carrier = $5B. So Lehman paid out 2 carrier equivalents in bonuses. That's extreme.
Sad that these market "Leaders" are need a welfare check to live another day.
Unbelievable. I think the system is beginning to come down in front of our eyes.
I was 99% sure that our comrades at the People's Commissariat of the Treasury would just let Lehman fail.
The fact that they aren't, vindicates the idea that even one IB failure would cause the whole house of cards to come down. Absolutely astounding.
Commissars Paulson and Bernanke are clearly in way over their heads. Making a "surprise" bailout announcement two weekends in a row is beyond Third World. The craziest thing of all is that Bush is no where to be seen in any of this, like he's already out of office.
Lehman paid out $9.5 billion in bonuses in 2007
Lehman paid out almost $30 Billion in bonuses over the past three years.
Typically, 50% of the bonus is in company stock with a multi-year vesting period.
What a scam. The country will be better off without all these investment bankers. It's a blessing, in part.
bearly writes:
nades "And damn Scottrade wouldnt let me buy any today... "
Oh, don't you worry. By Sunday you'll own plenty of LEH.
Upside ? Don't lose any sleep over thet.
touche!
........
cd said,
short- I was saying bottom on financials but I've noticed that SKF seems to have big hands wrapped around it now and any mention or news of bailout or rescue leads to mind bending reversals..If you can't watch it like a hawk..a big gain can disapeer in seconds..
SKF isn't my favorite choice, due to attrition from volatility. But in an IRA, shorting and PUTS are not allowed, so SKF is what I'm stuck with (any other ideas?).
Non-IRA I prefer Jan '10 PUTS on BAC, WFC and C. There are plenty of other institutions that will drop much more (or die entirely), but those PUTS are much too expensive.
or maybe the sheeple won't realize what a big deal it is if bush doesn't speak publicly about it. my experience is that most people have no idea whatsoever what the FNM/FRE deal meant.
Wait if we are going to own LEH, then when do I get my bonus. Oh and by the way, I want the same tax treatment that LEH had.
I live in the NYC metro area. There truly is a belief amongst the wall streeters that the housing bust wouldn't have much affect here.
Talk about being believing your own BS.
How many rumors from unnamed sources who were familiar with the situation saying some outfit was going to buy these insolvent clowns was that today? I lost F$#KIN& count.
a,na,na,na,
na,na,na,na,
hey,hey,hey,
U.S.A. goodbye
its GS
no, its BAC
no, wait....its someone else, but the deal wont be done till sunday
they are obviously just buying time here...speaks volumes actually...no takers
funny that, no enquiry into the false rumors.
Well, so much for my "guess" that LEH would be tossed to the wolves, and WM would be "saved", 'cause the first was "Wall Street" and the latter was "Main Street"...
Crude oil futures closed today at $100 a barrel and change. That's good. But apparently gas prices are spiking in a large area around Houston. Seems this might be a good weekend to hang around the house, go for a bike ride, read a book.
ShortCourage writes:
But in an IRA, shorting and PUTS are not allowed, so SKF is what I'm stuck with (any other ideas?).
I'd put money into the PIMCO fund (if you have one). Bill Gross seems to know what's going on. Scrupulous.
short-I'm not smart enough to answer that ?
having seen your posts I believe your more qualified..
I'm just trying to preserve capital and make a buck or 2 along the way..
my best play this week is buying smn after a rally..
Ax N. Sikl
you wrote usa good bye
look the EU and the USA are both in trouble
the EU and USA together account for more than half the worlds GDP total
so
correction, not USA good bye
world good bye..few if any will escapee the massive downturn
the pigmen have taken their game too far.
Kung Fu Panda,
May I suggest the "Rise, decline, and fall of the Roman Empire"?....seems only fitting...
Anonymouse writes:
Yeah, but some here may not understand that's essentially going long BAC and short crap like WM & WBC. SKF is like 200% inverse BAC (not really, but BAC is what's keeping XLF up)
Last time I looked a month ago, BAC was 6.5% of the Dow Jones Financials. Here was the total composition by Subsector:
Asset Managers\t7%
Banks\t37%
Consumer Finance\t6%
Diversified REITs\t1%
Full Line Insurance\t4%
Hotel & Lodging REITs\t1%
Industrial & Office REITs\t3%
Insurance Brokers\t2%
Investment Services\t12%
Life Insurance\t7%
Mortgage Finance\t1%
Mortgage REITs\t1%
Property & Casualty Insurance\t9%
Real Estate Holding & Development\t0%
Real Estate Services\t0%
Reinsurance\t1%
Residential REITs\t2%
Retail REITs\t3%
Specialty Finance\t1%
Specialty REITs\t3%
funny that, no enquiry into the false rumors.
GillianX
Silence is deafening!
I have a cartoon suggestion:
A parasite, the size of a very fat elephant, but with iddy biddy wings, attempts to lift off after turning the host into a shriveled flat husk of a skin below....but it cannot get away.
The caption:
It's never good business to kill the customer.
short-I like it because the boys on wall street seem to be concentrating on you know what sector...
You can tax everyone above 250k all you want to but that's basically going to be the equivalent of the AMT today. The way the last year has gone (in NYC anyway) $100 is the new $20. I know lots of people making 120-250k that basically are equal to what people making 70k dollars in the mid-west. That wasn't true four years ago. Heck, it wasn't even true last year. Another couple years like this and 100k dollars a year will be minimum wage.
A few days back mp denied he was Mr Practical from Minyanville. That MP has signed off and moved to Japan to wait out the storm. If you read the blurb on Mr Practical, -Minyanville
it says, "Mr. Practical travels to and lives in a country in which he believes the currency will strengthen against the other world currencies. Wherever he goes, because almost all of his assets are liquid, he transfers these assets into the currency of that country."
who knows... just sayin'
Oh, did anyone see Palin's interview with Charlie Gibson? She talks about war with Russia over Georgia.
Makes LEH crashing a bit less... dire.
I think the American taxpayers need to monitor the government closer and announce a revolution Sunday before asian markets open.
Anonymouse - the system of government of the USA is going to go. Europe and most of the rest of the world was already socialist moving towards communism. After this bail out of the rich in the US, I'm expecting a revolution in the US with the result being the end of the US style of capitalism and one much closer to that of rest of the world.
U.S.A. bye bye.
no tears though, 'cause you deserve the government you get
ShortCourage --
But in an IRA, shorting and PUTS are not allowed, so SKF is what I'm stuck with (any other ideas?).
I own puts in my IRA (at Interactive Brokers).
I ask as well, where is mp? His comments are much missed.
Nemo,
Schwab's rules, as I understood them, are that you can only buy PUTS on stocks that you hold long (like as a hedge, how old-fashioned!).
What a great idea - a cartoon suggestion:
A B/W line drawing (aka WS style mugs) of a fat little man who resembles, you know, like, know Hanky, suddenly upchucking and bunch of letters like ya know, BS, L, a few Fs...oh, and mix in some graphic images of putrid chicken and rotten cherry tomats and some slurry wet looking drain water sludge (oh, would there be room to include a kitchen sink, too)
"The Treasury Department and the Federal Reserve are helping Lehman Brothers put itself up for sale."
Can we assume that "helping" means you and I are insuring the buyer against any losses?
SRS. Buy low. Sell high.
anyone shorting MER?
Oh, did anyone see Palin's interview with Charlie Gibson? She talks about war with Russia over Georgia.
Yup, sounds like she think Georgia is already part of NATO. As you said, compared to a war between nuclear powers, a mere world depression is just Palin' in comparison.
fried
i asked, respectfully , CR, in a post if MP had broken a rule
that there has been no answer, indicates to me the subject is not open for discussion.
Yves says "The flow of funds out of emerging markets has reached the high-water mark of the period leading into the Asian, then Russian financial crises of 1997-1998." So we've got an Asian financial crisis to go along with our US/Euro financial crisis. Great...2008 will be in history books along with 2001, 1998, 1982, 1973, and 1929 in the category of panics and economic meltdowns.
Amazing how prices of US Treasurys are holding up amidst all these bailouts (not to mention wars).
I guess that documentary film by Bill Bonner didn't drive home the message hard enough!
How are we gonna pay all this back?
I think that deck chair should face towards the ocean and put a couple more coasters under the left leg because it's tilting a little bit, ok all better now.
sue
just let me off at the nearest ice berg
NEW YORK (Reuters) - Merrill Lynch & Co Inc's shares fell nearly 17 percent on Thursday as worries over Lehman Brothers Holdings Inc's future raised questions on which investment bank may be next to face questions about its survival.
"I think the market's telling you that if Lehman is going to go away, Merrill is probably the next victim," said Malcolm Polley, chief investment officer at Stewart Capital Advisors
Merrill Lynch shares catch Lehman bug
| Reuters
hey
fried
lawyerliz etc
MP in not in the dog house
CR, up thread, posted that there is probably a software glitch
whew
When I used to read about how the public supported and even cheered Bonny and Clyde, and other bank robbers of D1 (depression 1) days, I could never understand it. Now I do.
Now, I can even understand how kidnapping the families of businessmen can be considered moral. They don't leave the little guy many ways to get even.
Wish I didn't know now what I didn't know then.
This will get worse and may never get better.
anyone shorting MER?
joe blowhorn | 09.11.08 - 7:28 pm | #
Started that program last June finished by August and I will get my Christmas bonus, thank you very much
I really think the most important key to survivorship for any good financial tsunami is to have a good name for your bank.
Fannie -bad
Freddie- bad
Bear Stearns - nope
Lehman-bad
J.P. Morgan - really good name
Washington Mutual - not so good
Goldman Sachs - not bad
Merrill Lynch - not so good
Bank of America- very good name
Wachovia- not quite sure.
GMAC- not very good
AIG- not a very good name
I remember during the LA riots following the Rodney King verdict thinking how silly it was to destroy your own neighborhoods. I'm now realizing the rage behind their actions.
I never thought as a white middle class man I would reach the point where rioting to protest the injustice of the system would look to be the only solution. What is happening and how do we stop it?
Time to put away the fishing pole.
CR and Tanta,
It's a shame you don't sell coffee mugs -- you could give one away to the first reader who correctly predicts which firm the government won't bail out. I'm guessing it will be a company that caters to the poor. Too bad the Red Cross isn't private cause they're broke too.
So they figure that if it is acquired by X and then X by Y and then by Z then Z will be too big to fail so the tax payer will step in and by the whole thing. We use to called that a criminal enterprising...
But apparently gas prices are spiking in a large area around Houston. Seems this might be a good weekend to hang around the house, go for a bike ride, read a book.
Kung Fu Panda | Homepage | 09.11.08 - 7:12 pm | #
FWIW (we have a gas station north of atlanta) our fuel supplier ran out of gasoline today due to Ike...and prices are going up (wholesale) $1.65 tomorrow morning. They called us to tell us to fill up our cars NOW....
just sayin....
Pizza pizza.
They called us to tell us to fill up our cars NOW
really I just had the same call from my sister-in-law! wierd
If it's radioactive in Place A, why is it less radioactive in place B?
How exactly does a country go to or resort to nuclear war? I thought it was clearly understood historically by all parties that nuclear weapons were to be used only in retaliation, in the event of an indication of first use by a hostile party. Otherwise, a situation is created in which no country knows when it might be attacked without warning. That puts everyone into an inevitable and perennial launch-on-warning status.
In the case of 'lines drawn in the sand', there is generated a psychological state of immense tension, since lines can be re-drawn at any time, or misunderstandings, accidents and misinterpretations can easily occur, as well as impossible to predict and control random events. Who can trust anyone's intentions when weapons systems are organized on a hair-trigger basis, based on unknown and unknowable perceptions?
The direst possibility is that command and control over launch procedures under emergency conditions might be transferred to junior officers, by the book, or even automated. Many complications may arise in real circumstances that were not even foreseen.
In the old Soviet Union, operational control was, I believe, actually in the hands of the Chief of the General Staff, and Gorbachev's 'black suitcase' was connected to nothing operational.
Remember that 3 am phone call? What kind of human being would be capable of condemning the world to a nuclear war after five minutes consideration in the dead of night?
There must be confidence building, not paranoia building.
Market goes up tomorrow on the MER news. Monday the market takes the gain back when it is just another government bailout. Who would buy a company with negative equity? This is getting scary. How many more bailouts to go, before the end? The government could end up owning the entire financial system.
"The government could end up owning the entire financial system."
If you think about it for a minute, you may realize that the financial system owns the government.
Why does the headline remind me of this story?
Corpse Wheeled to Check-Cashing Store
Tiny URL - create a shorter link
Thanks a lot Hank.
Anonymous, what is the MER news?
Short:
That must be a Schwab policy to not allow PUTS in an IRA.
The IRS has no such ruling.
Nemo is right, I also hold PUTS in Interactive Brokers IRA and SIMPLE accounts.
i am a tax lawyer. i specialize in the taxation of financial transactions. there is no prohibition anywhere of any kind (as to federal law) against owning puts in an ira, or debit put spreads. or debit butterfly spreads, or debit condors. if your broker doesnt allow it, move the account to one who does. i believe ben & jerry does.
Oh, how intentionally misleading. The $9 billion inclded salaries, benefits and bonuses. Phil Gramm got at least one thing right -- the country has turned into a bunch of whiners.
"Compensation, including salaries, benefits and bonuses, climbed 9.5 percent to $9.5 billion from $8.7 billion a year earlier."
Great news! I have just obtained the North American rights for Hemp Salve. Why use regular Vaseline when you can have the healing and relieving effects of Auntie Bushka's Homemade Hemp Salve.
Auntie Bushka's Hemp Salve
Of the money Lehman employers where paid in last years bonuses .How much of that was giving in stocks versus how much is still in lehman's stock.
BTW- I doubt if Palin has any fear of going to war with any country. After all, Alaska is close to Russia and Canada, that's two foreign countries.
It is time to put up a magnum of Champagne... to be opened by the last investment bank left standing.
From the WSJ article on this subject:
"Bank of America, which is holding preliminary discussions about a transaction, appeared to be Lehman's best hope on Thursday afternoon. BofA may only do a Lehman deal if it is encouraged by the federal government, since it has its hands full digesting mortgage lender Countrywide Financial Corp."
My translation is very simple: Bank of America will do a deal with Lehman only if the Federal Government will provide a guarantee (backstop) on the assets they take from Lehman. In other words it is another damm Bear Stearns all over again.
Chuck
i think i get it
what BOA is saying is
we' guarantee them if you guarantee us and then they'll guarantee you
you see, its all guaranteed!
Cmon guys, read a little further into the article, for crying out loud. While the bonus payments weren't 9.5 billion dollars, it did amount to 5.7 billion (60%). In any case, an obscene amount, I'm sure unevenly distributed with (in all likelihood) the people who have put Lehman on the canvas ...8....9.... getting most of that money.
I remain puzzled at what appears to be general indifference to the increasingly out of control actions by the fed. How close are we to the breaking point?
On another note, I saw a McCain ad wheeling out that tired old "tax and spend liberal" chestnut. I guess the repubs are just "spend and spend" (and tax on the sly). Not that the dems haven't been busy with all sorts of harebrained schemes as well but I will really lose faith in the peeps if they vote for 4 more years of America Korporation.
Finally, if Bush is determined to invade a country before finally leaving office (can that day come soon enough?), wouldn't Dubai be a better choice than Iran? At least we could wipe out some SWF obligations (and make a pile of money to boot!).
weepstah
Sorry, make that Abu Dhabi, but might as well just go for the whole UAE.
weepstah
Hathaway,
Sorry, one or two bailouts early. It should have read LEH not MER.
80% of the LEH bonsus paid in 2008 was in LEh stock that vests over 5 years. The strike price was the as of the day the stock options were granted (around $20) So those given this "Bonus" will lose 4/5ths of it when LEH ceases to exisit. If they find a buyer @ $2 a share, then this years 1/5 is worth %80 less than when the "bonus" was granted.
2007 Bonus's were paid in %60 LEH stock options, again vesting over 5 years. I imagine the strike price on those bonus's were closer to $45 - $50. There are very strict rules about how employees may dispose of thier stock once it has vested. Which means that a great deal of LEH employees have a vast amount of their wealth wraped up in LEH stock. Many will have used these options as security for loans for houses, cars ect. As happened with BSC employees many millioniares become thousandiares over night.
Dick Fuld, the ceo of LEH is responsible for this turn of events. He had 6 monthes to find a solution for LEH and he did not.
Do not let the 30 - 40 people at the top of an organization color your view of what is happening to most of the people who worked/work at LEH.
The majority of LEH employees are deserving of your empathy. The went to work, did their job, and got paid. Now like many americans (most through no fault of their own) they will lose their jobs, their savings, and their houses.
I may make money off the downfall of LEH but i am not jaded enough to dance on the graves of the people going down with the ship. Because tomorrow one of those people may be me!
Escariot writes:
" gas prices are spiking in a large area around Houston. Seems this might be a good weekend to hang around the house, go for a bike ride, read a book."
spike may last longer than WE
Gaz supplies expected to be tight: refinery capacity will be the limiting factor
Tropical Storm GRACE
IKE path update
Tropical Storm GRACE
make that:
Gaz supplies expected to be tight: refinery capacity will be the limiting factor
Bloomberg News
"Do not let the 30 - 40 people at the top of an organization color your view of what is happening to most of the people who worked/work at LEH."
indeed,
and also no matter what we say about the "crooks", for me today is forever in memory of some great people that were not just brilliant but also friendly and generous and taught me everything I know about trading
Wall Street's true colors are coming out: Efficient Allocation of Risk to the taxpayer wallet!
As for Ike, why don't they just send Paulson down to Cancun? All that hot air should be enough to create a low pressure system large enough to pull Ike off course.
LALA,
I'm sure you're right that some LEH employees deserve our sympathy.
However, it may be an insignificant number, in my view. The stories I've read and heard about IBs treatment of customers does not paint a picture of nice guys laboring away with the traditional work ethic.
They screwed their customers for every penny they could, in what often amounted to robbery of innocents. They sell products that their customers usually don't understand, and they take every advantage of it. I don't believe that is only at the top levels either.
Sorry, but that's the way I see it. So sympathies to a few, but good riddance to most.
The american economy has been built by people selling products to other people who DO NOT need them.
As far as IB's taking advantage of their "Innocent clients" - seriously?
There are NO innocent clients of IB's. And all successful investment bankers are more asshole BSD than they are nice guy. But them most really successful people have an element of ass hole in them.
In the last 6 years everybody in the country had been chasing profits at all costs. From the CEO of lehman right down to the Joe and Jane mainstreet.
Everyone used asset inflation to take on debt and buy things they couldn't afford. This is NOT an us and them proposition. That mentality is what is keeping the UNITED STATES in the shape we are in - "you are with us or aginst us" , black/white, republican/democrat,man/woman....
As long as we buy into this dichotomy we will continue to spend most of our time defending our postion in the dichotomy and not coming up with solutions to our problems.
Just in case you forgot .. let me refresh your memory on the bonuses paid in Dec 2007 ... compliments of - Economist Views
"Merrill Lynch & Co. paid $9.54 billion in bonuses, down only slightly from what it paid for 2006 even though its net revenue had fallen by two-thirds and it reported a fourth-quarter loss of $9.83 billion.
Morgan Stanley's bonuses increased to almost $10 billion, up from $8.39 billion the previous year. Even Lehman Brothers Holdings Inc., now in a heap of trouble, raised its bonus total by half a billion dollars, to $5.70 billion "