When the republicans allowed these banking changes we were told that they would regulate themselves since it was in there own best interest to stay solvent. We have allowed to many mergers because they would become more efficient and the economy of scale would make them more profitable. Fuld of leh had 700 mil in stock and the employees have lost 10 billion. Did we allow the creation of a house of cards? Take out a few cards and the whole thing smashes down? Is this why we regulated the corps in the first place since the depression to avoid such carnage?
. Wave: People keep looking and asking for the next bubble. In light of these historic events, I believe the bubble of corruption and greed has begun to pop and a new era of integrity and honesty will evolve out of all this. ******* September 15, 2008 SouthAmerica: I want to see many of the people responsible for this mess to go to jail. The American financial system became the largest financial scam in world history - and the government has to get to the bottom of this fiasco and lock up some of the people responsible for this massive mess. By the way, the government should go after many of these guys who made 100's of millions of dollars and left behind this mess for someone else to sort it out. The government should take away all the money that these people made on these scams that are costing billions of dollars to clean up and are putting everybody out of business. If they don't punish these guys right now then it will be open season in the future for garbage even bigger than what we have today. .
This is the very reason that the SEC is an absolute joke.... The number one reason for their existance is transparency and fairness..... This is exactly what did not happen.... Why ? Because the legal largesse system presses its limits......SEC employees only make money when they cross over and know how to max legal largesse.... It will not be until there is no crossover allowed from the SEC to the corporate checkbook side ...that this can take place.....
. September 15, 2008 SouthAmerica: Talking about house of cards. Lehman Brothers market cap a little over 1-year ago was US$ 29 billion dollars. A few minutes ago that stock was trading at .17 cents per share and the current market cap of Lehman Brothers is US$ 117 million dollars. As the meltdown continues can the acquisition of Countrywide and now of Merrill Lynch bring down Bank of America in the future? Can Bank of America absorb all the financial losses that are in the pipeline since the downward spiral in house prices is going to snowball in the coming months with a new flood of foreclosures and massive financial losses? Would the Treasury and the Federal Reserve consider Bank of American too large to fail and have to come to the rescue of that financial behemoth? As we have seen with Bear Stearns and now with Lehman Brothers market capitalization can evaporate overnight and the institutions become worthless before you can count to 3. .
Can the Bank of America absorb all the financial losses that are in the pipeline since the downward spiral in house prices is going to snowball in the coming months with a new flood of foreclosures and massive financial losses? SA, this false economy and false lifestyles is only in about the 3rd inning or so. Best
. September 16, 2008 SouthAmerica: As AIG and WaMu are also sucked into the black hole in the coming days and join Lehman Brothers, and Bear Stearns - the meltdown in US financial markets will continue as the contagion spreads throughout the US financial system. The meltdown on the derivatives market is under way and that is the trigger for a financial system meltdown similar to what buying stock on margin helped implode the stock market during the market crash of 1929. This time around the culprit will be the derivatives market and the mind-boggling usage of leverage bordering a complete lack of even a minimum of common sense. Now that thousands and thousands of people are going to lose their highly paid jobs in Wall Street and thousands of these people just became ex-millionaires since their stock options, and investment of the stock of their firms have evaporated overnight â many of these people are going to have problems paying their mortgages increasing the number of foreclosures in the high end side of the real estate market. Basically the entire system is spinning out of control and is imploding very fast. I listed a few stocks below and in just these 6 stocks $ 500 billion in wealth has evaporated from the US financial system in a very short period of time. Never mind the loss in wealth that is going on around the United States in the real estate market. In no time over 20 percent of all mortgage holders will be under water and many of these people will walk away from their personal financial mess creating even more massive losses to be absorbed by the financial system. If this was an American Football game we still are in the first quarter and the game is already getting out of hand. If the Federal Reserve gives a cut in Fed Funds rate today that would mean nothing to this fast imploding financial system. The wealth effect on the US economy will work in reverse and Americans are going to feel poor by the day. The carnage still underway and will have a very negative effect on most peoples Pension funds, Mutual Funds, and so onâ¦Until the entire mess unwind on all these markets it will take a long period of time for the dust to settle and people realize the devastation that happened to the entire US economic system. The entire US financial system is in damage control and only fools would invest their money right now in such unstable financial environment. The fools who decide to invest their money right now deserve to lose it all because they are just a bunch of suckers. You canât stop this massive financial implosion process with a few band-aids and public relation spins. The system is already spinning out of control with all kinds of things (including the derivatives market) that have been placed in motion with the nationalization of Fannie and Freddie and the collapse of companies such as Lehman Brothers, AIG, and WaMu among others that will create even more downward pressure to the entire US financial system. If some experts try to convince you that the US financial authorities are aware of the impact to the US economy of all the financial problems that are spinning out of control and that the Fed and the Treasury have everything under control - Al I can say is that that person is full of bullshit and nothing else. At this point nobody really knows or understands the full extent and magnitude of the financial meltdown that is underway. The one positive thing to keep in mind is that the world still is full of suckers, naïve people, and very greedy people who are willing to jump in and hope for the best. ***** Bear Stearns market cap went from $25 billion to a fire sale to JPMorgan Chase for a mere $240 million. Merrill Lynch Market Cap was $76 Billion (Merrill Lynch 2005 Annual Report) In September 2008 Merrill Lynch Market Cap $25 Billion. Citi's market cap was $290 billion at the end of 2006. In September 2008 Citiâs Market Cap reached a low of $76 Billion. Lehman Brothers Market Cap a little over 1-year ago was US$ 29 billion dollars and on September 15, 2008 Lehman Brothers Market Cap reached a low of US$ 117 million dollars AIG's market cap is down to $13 billion, down from $129.2 billion at the start of the year. Washington Mutual's market cap has dropped from $55 billion to $3 billion in less than a year. Just on the above companies the loss in market cap has been devastating as follows: Bear Stearns = $ 25 billion dollars Merrill Lynch = $ 51 billion dollars Citi = $ 214 billion dollars Lehman Brothers = $ 29 billion dollars AIG = $ 129 billion dollars WaMu = $ 52 billion dollars Total = $ 500 billion dollars ****** September 15, 2008 AIG (AIG): A Bridge Loan To Nowhere AIG (AIG) managed to lose 60% of its market value today. At one point the stock was off 70%. A partial rescue came in the form of permission from New York State for the huge insurance company to loan money from its operating units to the parent company. This could provide as much as $20 billion. â¦AIG's market cap is down to $13 billion. â¦AIG is trying to raise $70 billion to $80 billion in bridge financing with the promise that the money will be repaid as the company sells its auto insurance, annuity, and aircraft leasing businesses. â¦Warren Buffett had a look at a deal to "save" AIG. He passed. So did a lot of other smart money that got a shot at an AIG financing over the weekend. AIG is now pursuing the greater fools. But, they are running low on capital themselves which leaves AIG at the edge of liquidation. Source: http://www.247wallst.com/2008/09/aig-aig-a-bridg.html Note: AIG's market cap is down to $13 billion, down from $129.2 billion at the start of the year. ****** The $639B Bankruptcy Wall Street emerged from the weekend in crisis mode and with a completely reshaped financial sector. At the forefront of the crisis is Lehman Brothers (LEH), which after 158 years in business filed for Chapter 11 bankruptcy protection as it becomes the latest victim of the credit crisis. Valued at $639 billion, Lehman's is the largest bankruptcy filing in U.S. history -- easily surpassing the collapses of Enron and WorldCom combined. â¦Merrill Lynch Seeking to avoid Lehman's fate, iconic brokerage house Merrill Lynch (MER) agreed to sell itself to Bank of America (BAC) for $29 per share in an all-stock transaction that shocked Wall Street. The deal, which is subject to shareholder and regulatory approval, presently values Merrill at $50 billion. Shares of Merrill soared during intraday trading but closed flat and off by $12 from the offer price. Merrill has also been slammed by bad bets in the housing market, posting $40 billion in write-downs and credit losses over the past year. The selling price represents a 70% premium from Merrill's close on Friday, though the company's shares plummeted 36% last week to its lowest level in nearly 12 years. Source: http://www.foxbusiness.com/story/markets/futures-plummet-lehman-bankruptcy-merrill-purchase/ .
SA For a start, we like Brasilians, the biggest complication is Portuguese pronunciation, having just spent 5 years arm wrestling with Spanish. When in Brasil our attempt at the language is bad Portuguese with a Spanish twist and our friends say" for Gods sake f9 please speak English so we can understand you" Anyway, we press on through the fog. As New Zealanders we find that we share the more open approach to life with Brasilians than the Argentinians. We have very enjoyable times with our Argie amigos but we have fun with our Brasilian friends ... life is good. Right now, there is so much opportunity for investment in Brasil that one can be very very selective indeed which is always the number one rule when investing in Lat Am and we have built a very strong series of friendships both in Brasil and Argentina who protect our best interests with their very sound advice. In fact the friendships we have built here are incredibly strong given that five years ago we knew nobody because friendship and family are the cornerstones of society. The art to living well and happily in Brasil is to assume full responsibility for yourself, your actions and their subsequent outcomes. Having watched a large number of ex-pats arrive with high unrealistic expectations, bringing their life style bubble with them, only to fail miserably within three years and return back from whence they came, it reinforces upon us more than ever the commanding role that responsibility demands. A guy from NY turned up in BA last year to run the marathon ... it is a big international event.... and he thought to share his experience with us all in a letter to the editor of the BA Herald. Firstly he had to walk 3km to the start because he could not find organised transport. By the time he completed the run all the drinks and food handed out by the organisers had been demolished and naturally he had to walk 3 km back to his hotel and was thoroughly pissed. He vows never to return to BA. His letter was typical of several letters addressed to the Editor kindly pointing out the defficiences in the BA lifestyle. Had he approached the adventure with a little foresight and planning and a much much better attitude he would have meet people only to willing to offer advice, transport, hospitality etc and he would have had a ball. Anyway, I could ramble on for hours about Brasil and Argentina, but maybe some others might want to chip in instead. regards f9
Returning to a more logical, less levered , less credit driven economy is actually just what the US needs..... The market will find out what it can sustain on its own..... The current market identifies stupidity and erroneous thinking.....and then discovers its price..... The Bush legacy is certainly being established as the era of stupidity and lack of leadership..... What is particularly disturbing is that the US is starting the process all over by having individuals who are poor students in economics and have no true understanding of the financial markets, particularly derivatives.....serving as CEO of the US.......F'n unbelievable.... Since this is the most important item on the list on with regards to impacting US economics, then understanding this aspect of the financial markets is a must.... Derivatives are what has driven this marketplace as the supporting the basis of the high leverage business.....driven by high fees and commissions.... What account stays around for long that only has 5 to 10% skin in the game ?????? This is like putting in a CEO that has no prior experience and no knowledge of the industry that they are now in charge of...... ????????????????????????????????? What would go a long way is to just get back to basics and end the derivatives game about leverage..... Brokerage would provide a fantastic service just to offer all worldwide instruments and currencies.....with regards to stocks and bonds in true universal direct access accounts..... Add to this a place to go that is not in the brokerage business....a place where information is available about all the instruments in a universal account.....with a 24/7 live direct access line with an account that can be established at any approved bank.....etc....in any language.... This is what needs to happen next..... The second part of the equation is localized management of debt instruments.....Debt must be managed directly by the lender...and loaned on a discounted basis...etc.... The US cowboy stepped out a little to far this time....got stung....and now knows better...... Stay away from that hornet's nest cowboys....then you won't get stung again..... The US economy has been set up as a highly levered margin account destined to fail......soon to be the account of someone who has never traded before......
. September 17,2008 SouthAmerica: Good news for Wall Street â the good times are back. Here is the lesson that we all have learnt from the Lehman Brothers and AIG fiascos: The more reckless your bets the better are your chances for a US government bailout. Next time leverage at ratios of 80 to 1 or 100 to 1 â the bigger the leverage and the risk you place in the financial system the better are your chances of being rescued by the US government when things go sour. The good news for AIG is that the US government wallet is open now and if they need more money all they have to do is send a note to Paulson and Bernanke and they will be happy to sent a few billion dollars to be gambled. The next on the list for a bailouts will be WaMu and after that Citi Group. Since the US government is in an acquisition spree I hope they donât forget to acquire a few car manufacturers such as GM, Ford and Chrysler â and after that a few airlines might come handy sometime, a few more banks, Boeing, a few hotels, a few casinos,(Ups casinos the government already owns a few) and even Bed, Bath, and Beyond. At the rate Ben Bernanke is acquiring new businesses before you know you will be able to call the Federal Reserve and order a pizza. I wonder if the employees and shareholders of Lehman Brothers can start a lawsuit against Paulson and Bernanke and also the Federal Reserve and the Treasury for discrimination. See The New York Times article about AIG's bailout. .