Does anyone yet have an idea what type of securities exactly 'deteroriated in the past 24 hours' their capital position ???
yea i read a bit about traders within european banks and firms being instructed not to do business with BSC... Well if its a merely a confidence collapse, then thats nothing total transparency can't fix. Its not like 45T of Credit default swap obligations are simultaneously due at BSC and they can't pay. If they are OTOH, then they as well as the entire banking system is SOL. With the fed's backing, if they aren't already bankrupt on forced to liquidate securities, they might be OK.
Another timely downgrade from S&P. Luckily the stock had only dropped 50% when they warned their clients that there might be a problem with BSC. Saving the remaining 50% on the way to zero must make the S&P subscription worthwhile. http://www.bloomberg.com/apps/news?pid=20601087&sid=a10jdfY1QXU8&refer=home Honestly, ask your pension fund manager if he uses S&P ratings and if he does move the account.
That is a free market. Stock holders can vote with their feet if they don't like what they see. Of course, it may be worthless by the time they see it. That's just a minor detail though...
We've seen this pattern before, first with Refco then Northern Rock and look where they ended up. Why risk dealing with them when there are sounder alternatives whatever the cause of demise. The fed went through JPM to save the newspaper headlines of a direct bailout I don't believe this "operationally easier" line, they did it to prevent outright panic. "Parts of the business are sound" is what analysts said when BOE was lending to Northern Rock it didn't stop the shares being pummeled and every man and his dog hauling out their money.
Everyone decided to get their money while BSC still had it. I think the biggest problem is going to be its customers. Nobody wants to do business with them now which will affect future income. I think there was a serious over reaction today with the selling though. 150% of total shares outstanding were traded. More BSC shares were sold today than exist! Go figure! I imagine we will hear on monday about a buyout of 50+ per share. They even said this morning that there was no problem with credit, it was just liquidity and its been temporarily fixed. These guys are smart and they will have a permanent solution on monday.
I hope your right. it looks like this guys make Centro Properties look like berkshire hathway "Almost daily, Bear Stearns has to renew a large percentage of its $102 billion worth of open repurchase agreements - or short term loans from Wall Street dealers - or make up the difference out of its cash position." http://money.cnn.com/2008/03/14/news/bearstearns.fortune/index.htm?cnn=yes if they dont solve this over the weekend, then bear might became the new ABK and dow will move on 'bailout' news like mad