Update: Lehman Brothers faces a storm

rippedthunder, westfield, MA, posted on March 17 - are you Thomas William Laplante?

The free market is going to have to correct this mess on its own, without the intervention of the Federal Government or the Federal Reserve. Artificially low interest rates, easy credit, and bail outs do not resolve anything…they only further compound an already complex web of economic troubles. I’m sorry that some companies will go out of business and that people will lose their homes as a result, but these situations primarily exist as the result of poor decision making and risk taking.

Many parties are accountable for the current condition including the Federal Reserve, lenders, investors, and borrowers. However, one party that should not be accountable fix the outcomes of poor investment and financial decision making is the American Tax Payer or the Federal Government.

The manner in which our Federal Government and the Federal Reserve is destroying our nation’s currency is mind-boggling. I think if anything we could all agree that our Federal Government does not have enough self restraint and/or accountability to successfully manage a fiat currency whereby we print money out of “thin air” that is only backed by the promises of our government. Our dollar needs to be backed by something of value such as gold or silver. The promises of our elected officials carry very little value. We need to get back to the gold standard so that we have a stable monetary system.

For a good read on the history of inflation, the gold standard, and continuing destruction of our currency check out this article, Gold, Peace and Prosperity by Dr. Ron Paul.

http://www.mises.org/books/goldpeace.pdf

What we’re they all thinking? Sound of bubble bursting! BOOOOOM!!!! there is no free lunch! I say let the free market work it out. We will all suffer but what are ya gonna do? It’s too late now to solve the problem. It will have to run it’s course.

1)Which institution would have the financial capacity to buy LEH?
2)JPM was the suitor for BSC, b/c they were the clearing agent for BSCs trades. So does LEH have/use a clearing agent for their trades?

we are all guilty, stop spending money you don’t have. Don’t buy houses when you can’t make a down payment.Stop buying stock in companies without doing research. We are all to blame

We are witnessing the fall of the American Empire. We, the stupid, but not less greedier foreigners lent the Americans every year 6 US $ for every 100 Dollars they spent for their lavish life stile. How could a continent spanning nation with only a service economy left (75 % of US GDP) repay ever any dept? The Americans are gulping up natural resources and manufactured goods from around the world. There is nothing spare to use for repayment and to be sent abroad. Too few factories left to make goodies for the lenders. Should we fly over for haircuts ? isn’t that what a service is ? We are all pretty much in trouble.

This should come as no surprise as investment banks make the majority of their earning through trading their own assets. Back in history, they made money from three things: selling advice (analysis(, M&A and the like, and the spread on trading (commissions). Now what, 85% of their gains are based on essentially day trading or leverage. Essentially they have become hedge funds for themselves.

I guess when you were given a growth target of 15% (or you lose your job), sub prime looks good as it gets you close without “too much” risk. Too bad someone always gets stuck holding the check when housing booms go bust - this time the banks (all of them) are getting whacked.

Expect the next two quarters to be close to armagedon in the US markets - all of them. Commodities will fall in the next 15 months - just like they did after the 1979 oil embargo ended.

do anyone smells fraud among all these giants? Is this the next Enron? Where is the Justice Dept?

How does a company like Bears Stern actually make money. They don’t make widjets and all they do is push paper around and presto money comes in (or not). It amazes me how 14,000 people can be employed at this business. Good for them on going bust, I hope the rest of them go. Banks should be banks. Lend money to ordinary folk and make money that way. The whole bloodly thing is too complicated. It needs to be put simple. End of story. From a blue collar person .. PS .. make money by providing a real service as opposed to paper pushing.

And AWAY WE GO!!!!!!!!!!!!!!!!!

Hang on it’s going to get ugly

President Bush today told us that his administration is on top of the economy. Be afraid. Be very afraid.

(Of course, they are responisble for this mess, so they should be quite familiar with it. Right?)

Those of you who think that this whole fiasco will be over in a year need to do a bit more research. Our financial system is on the brink of collapse. Were it not for our greater knowledge now, we’d already be in a depression. The housing collapse is nowhere near over. Wosre, there is just as big a bubble in commerncial real estate and in consimer credit-based securities. These, too, are expected to collapse this year. We may be looking at a loss of nearly 40% of our GDP. No one can say for sure, since no one knows how much money is involved in the sub-prime securities, what they ae actually worth, or who owes what to whom. The Fed cannot bail them all out. And that’s what the Bear Sterns sell-off is: a bailout. JP Morgan will be paming off Bear Stearns’ bad assets to the Fed. If this weren’t the case, they never would have bought them out, even at $2/share.

Are we a Banana Republic now? Thank you George Bush we have become just like you!

I guess bonuses will be lower this year.

A year from now most of the problems will be forgotten. Housing prices will have fallen, but the dollar and commodities will have stabilized by then and valuations will have returned to normal.

The Ross’s and Buffet’s will smile all the way to the bank, because they were buying cheap while everybody else was selling in panic. Fear clouds judgement.

A largely incompetent federal government is interdicting the free enterprise system. Expect the usual from them: disaster.

Can anyone give a guess as to what will happen to the 14000 employees of Bear ?

can you say bloodbath ?

Lehman should dissolve the Townsend Analytics division-which develops the trading software, RealTick, it has got to be one of the worst trading platforms on the planet. Constant service interruption, the servers crash constantly when you need it most. They quickly blame their data providers or the exchange - anyone but themselves. Oh and if Fed announcing something - forget about it starting up the application.

You know that feeling you get in your gut when you’re just about to go over the top of a roller coaster? Here we go.

Bear Stearns need a real leader, someone like Bob Sine to take over and lead it back.

Is this the first phase of long term asymmetric economic warfare?

How can we be sure that within the confines of our monetary system that brokerages such as Bear will not collapse upon the incendiary allotment that we all behest?

Bear Stears said had no liquidity
problems , last week.
Is Lehman facing a storm? Yes, wait and see.
Greed,greed.

Ladies and gentlemen, you are right now witnessing the beginning of the end of dollar hegemony.

What’s the price for Goldman now?
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Business models for banks are broken all over the place. HongKong’s blue chips has single digit P/E now. Our banks like Citi are borrowing @10% and lending out @6%.
Brokers have nothing to sell: fix income market is frozen, stockers are going down, etc. Is this what they call “system risk”?

If Bear is worth less than $2 per share, what about prices for the rest of the financials? Citi, Wamu, Lehman, Merill, or Goldman?

Their books are at least as murky as Bear’s. Is Goldman headed to $80 in the next 2 weeks?

Can anyone actually price these guys? A few buildings means $0 if you owe $30 billions (or more, or you don’t really know how much since you can’t price you CDO on and off the books)