NYC to probe if Bear Stearns deceived investors (Reuters)
They probably have to. Before we waste too much breath on this one, wondering what a NYC investigation into Bear Stearns’ final days is going to yield, we probably just have to acknowledged that it’s inevitable. Now if they try to make a whole lot of nothing, when we can jump up and down or whatnot. Also, the SEC has said it won’t rule out an investigation. But again, why would they rule one out so early?
Bear’s Run-Up Sets the Stage For Epic Clash (WSJ)
On the matter of the run-up in BSC stock, WSJ is predicting an epic clash, with shareholders set to reject the $2 deal. Of course, this view goes against the trendy explanation that BSC counterparties are buying the shares so they can vote in favor of the deal, knowing that the haircut they take on the common stock will be worthwhile to have their other assets insured. We’re not 100 percent convinced by that, but it does make some sense, given that even at $4 or $6 or $8, BSC is pretty cheap compared to the other BSC-related assets out there. That being said: if shareholders were to oppose the deal, it would be tantamount to sedition. Seriously, we’re already in uncharted territory, but we’d go deeper into the depths if shareholders thumbed their nose at the Fed. What combination of asset prices can we use to measure the odds of a deal happening at this point?
Asian Stocks Advance Most in Month on Fed Rate Cut, Earnings (Bloomberg)
Between the rate cuts and the bank earnings and good reports from China Mobile and Alibaba, Asian stocks finally turned in a good evening. The Nikkei started to claw back from its harrowing losses, rising 2.5 percent, while the broader Asia-Pacific index was up 2.6 percent. In Australia, Macquarie rose 7.6 percent.
BNP rules out bid for Societe Generale (AFP)
Just so you know, BNP is not going to bid for SocGen. There had been some speculation of a deal, but with SocGen having raised money and BNP not seeing any shareholder value in doing the deal, there appears to be little impetus.
The loyalty bias (Free Exhange)
Some academic analysis of “loyalty bias”, ie investing an inordinate share of one’s retirement income in the company you work for. Obviously the issue is getting a lot of play, as people sort out the BSC wreckage and see shades of Enron. According to one estimate, this loyalty bias contributes to a 20 percent reduction in income, though we’re not quite sure what that means. Is that across the board, or does that just refer to people who exhibit loyalty bias?
Big Payday for Wall St. in Visa’s Public Offering (NYT)
Good for Wall St. that some cash will come in via the successful IPO of Visa. The sale represents a nice windfall for its corporate parents and there’s an estimated $500 million in i-banking fees, so that’s cool. Our interest: we’re sort of nuts for one-letter tickers (“V”). So between this and the recent Netsuite IPO (“N”, we’re excited to see the alphabet come closer to filing up.
Yahoo Shows Some Leg (ATD)
Yahoo finally decided to fight back yesterday, arguing for the first time yet, why it felt Microsoft’s offer for it was too low. It filed a big presentation, saying finances were good, that it had a lot of strategic assets and that Microsoft was simply lowballing it. We’re wondering what took ‘em so long. The company said it had drawn up this financial projection well before Microsoft’s bid: so why not do it earlier, as opposed to doing it as a last-ditch measure, after various other lifelines have proven to be futile. Anyway, we wouldn’t be totally shocked if they squeezed another dollar, maybe two, out of old softy.
Re: “Bear Stearns is fine.” (CrossingWallStreet)
There continues to be a lot of debate about the Cramer video — you know the Cramer video about Bear Stearns. The fact that he may have gotten a call wrong is really no big deal to us. Even colossally wrong: whatever. But his explanation that he wasn’t talking about the common but about having your money with Bear Stearns as quasi-depositor just doesn’t make sense. Some buy it, but, like Eddie, we find it a bit hard to swallow. After all: what kind of Bear Stearns account holder would actually write into Mad Money for advice on that question? Seriously. Beyond that, if he really thought the questioner was jut a depositor wishing to move his money from Bear to some other bank, then why would it have been so stupid to do so. The only “stupid” move you could come up with would be selling the stock at too low of a price. He says he wanted to prevent a run on the bank. If true, we should thank him for willing to be put up with so much abuse in the name of the health of the US financial system.
i’d like to reiterate a comment from yesterday that there have not been any boobs on this site in a while and it is time.
please and thank you.
becky looks cute today
“What combination of asset prices can we use to measure the odds of a deal happening at this point?”
Tell your boys at Intrade to get on this one. Joe.
Over the weekend, why didn’t the Bear just tell the Fed, “You give us the $30 Billion backstop the way you’re planning to do with JPM, or we’re going to file for bankruptcy first thing Monday morning, period! To hell with the economy, to hell with the Fed, Fuck JPM, We’re fighting for our life!” The way I see it, JPM has no downside in this whole thing, only upside. JPM is protected by the Fed against losses, and the Bear Tower alone is worth 4 time the BSC sell price. JPM is going to vivisect the Bear, fire most all of the poor bastards who work there, trash all of the shareholders, and then have a get-well payday when the shit settles. I’m just a hillbilly from Delaware. Can somebody explain to me why the Bear couldn’t have done that?
*LEHMAN, GOLDMAN SACHS BORROWED FROM DISCOUNT WINDOW, CNBC SAYS
Can people please stop saying that JPM got a great deal just because 383 Madison is worth more than the equity of BSC? They’re buying all the liabilities too, not just the assets. Enron’s HQ was worth more than Enron’s equity too. It doesn’t mean that Enron’s common was a bargain when it was trading at
Hmmm… why are the twin towers in the pic?
@8:52 I suspect that the backstop would not have been enough to prevent Bear’s customers from unwinding a gazillion dollars of repos, which would have caused a big panic when the underlying securities were dumped on the market. Which is why the Fed got JPM involved.
@9:06 Agree that just focusing on the value of $383 vs. the $2 purchase price is simplistic. However, if you do look at the whole thing – all assets, less liabilities – leads me to conclude that it was in fact a steal.
The towers? Its because its the five year anniversary of the Iraq invasion. It reminds us of why we’re in Iraq. Everyone knows that the pilots were all from the Iraqi air force and the operation was masterminded by Saddam Hussein. And now that he’s been toppled we’re safe.
A picture of the towers?!
Too soon!
@9:35 is right. I reflect on that every day. In fact, just the other night I was having a couple of cold foamy ones and some rude fucker purposely walked into me and spilled my beer. So, I went over to the table next to his and punched some other fellow in the face. Knocked him the fuck out, too. Don’t tread on me!
Sure, their book value is more than $2 if you take assets minus liabilities but that’s assets when JPM sells them on the open market, not assets when Bear sells them in Chapter 7. If Bear filed for Chapter 11 shareholders would continue to own their Bear stock after (if?) Bear emerged from bankruptcy and wouldn’t get paid anything because that’s not how Chapter 11 works.
Quiz time for the mouth breathers…
First question:
Japan bombed Pearl Harbor, so FDR’s first response was to:
1) Invade Japan.
2) Invade Africa.
Second question:
In 1962 Cuba had missiles placed where they could destroy Washington DC before the US could act. JFK’s response was to:
1) Threaten the complete annihilation of Cuba.
2) Threaten the complete annihilation of Russia.
This concludes today’s quiz.
Genius guest @10:53,
Actually the US lost WAY WAY more people in the offensive on Germany – which never actually attacked the US directly. Some fuzzy thing to do with saving the free world and coming to the aid of your allies etc etc.
Also, the US TILL DATE has troops stationed in Europe and Japan (60 years running) which were placed there to counter the Soviet threat.
So dear hispter, I know you flunked through school and now eke out a living as an ‘artist’ somewhere in the village – washing dished for food occasionally. Please go back to you communist friends and try to charm them with you ‘intelligence.’ Thanks for playing ‘douchebag of the day’ though!
You’re the dumb one matt, comparing Germany, which was a credible threat to the rest of the world, to Iraq which was not. It was a soft target that was invaded to make coke fiend GWB look like a man. The fun was supposed to be over in a few months. Here it is five years later and we’re still there.
BTW: its “US TO DATE”, not TILL. Or didn’t they teach you that at Nassau Community?
” Germany, which was a credible threat to the rest of the world,”
And did some divine oracle make that pronouncement? (Or may be it was just Jeremiah Wright, who knows?) I thought your initial argument was that the US should not attack any country UNLESS that country has directly threatened the security of the US.
Now you have moving onto ‘presence of a credible threat.’ Ok, so who decides what a ‘credible threat’ is and whether it exists or not? Was the taliban (and the al queda people it harbored) not a credible threat to the world until 9/11? If it was, then why did Clinton not take action? Was THAT the failure that led to 9/11?
Who was to decide that Germany would actually ever end up taking over the world? That they would not collapse under their own weight fighting the Russians? Being a Monday morning quarterback is ridiculously easy. There were MANY people who strongly opposed US involvment in WWII. So were they right?
95% of the country, including a majority of the liberal politicians supported attacking Iraq. They had access to just about as much information as was available and they also agreed with the fact that there was limited evidence. Then all of a sudden, they started apologizing once they saw the war not turning out right.
But at the time when a decision was to be made on whether the threat was credible or not, they said it was! And never – for any situation – will there be iron-clad proof of ‘credible threat’ unless the country is directly attacked.
And just for your education, the threat in the Cuban missile crisis was NOT from Cuba – they couldn’t do SHIT to the US even if they wanted. It was from USSR, and the President chose to threaten Cuba because it was the easier thing to do. Unless of course you believe that Cuban missle crisis was about the Cubans trying to nuke the US. In that case, I apologize for indulging in this discussion with you.
Geez, I thought the quiz answers were obvious; guess not.
Here’s the answer key:
First question: Answer #2. FDR’s first response to Pearl Harbor was to invade Africa, not Japan.
Second question: Answer #2. Even though Cuba was the country aiming missiles at the United States, JFK threatened the complete annihilation of Russia, not Cuba.
The point illustrated from this history, which apparently went over the heads of some, is that the shortest distance between two points is not always a straight line.
Also, here’s more on the threat from Iraq:
http://freedomagenda.com/iraq/wmd_quotes.html
Read and learn…
Fine. I get it now. My mistake. My bad. I apologize.