maxcrc Posted March 3, 2008 Share Posted March 3, 2008 (edited) ........................ I was not aware of the delicate situation in the real estate sector in Europe until just last week when I talked to a friend of mine at Goldman Sachs who oversees many of Goldmans European operations, he personally thinks that 6 months from now Europe could potentially be facing a more severe real estate crisis than the U.S. is currently in. Sigh..... I wonder VV, how many times you have been in Europe and how many countries you really know of, where they are, and what you know about their real estate markets..(YES markets). Maybe you and your Goldman Sachs friend don't realize it but there is NO European Real Estate market....and it never existed as well. Although there is the Euro as a currency in most countries, but not all, and a European Union as well as all kinds of other inter connected EU country-cooperations there are many very fragmented real estate markets in all of the various countries of mainland Europe and the UK. Some countries, like certain parts in the UK and Spain* for instance, are having their own problems in certain (but not all) real estate markets but that is not a European problem; it's a local country problem. What's even more important, is that EU countries (read: Banks) do NOT have a system where banks grant top mortgages to buyers who can't afford a house in the first place, which was done on such a large scale in the US and thus created the infamous Sub Prime Crisis. * The real estate problem in Spain is a problem in itself. Spain has a long tradition that young people BUY a house and (almost) never rent. They always bought a house with a mortgage, based upon their income, with a low interest-% so that they were able to pay for their house. However, money became more expensive, faster than their salaries would rise, creating cash- and payment problems. The main problem was/is that the vast majority of mortgages in Spain is a 1-year mortgage....with the interest fixed for 1 year but with rising interest percentages for the next year. On top of that the average house price dropped, severely, (20% in 2007) leaving a market, full of people, living in houses they no longer can afford and NO buyers to buy them (out). On top of all that, 'Spain' kept on building and they built more houses in 2006 and 2007 than France, Italy and Germany combined, mainly created by GREED of the real estate developers, not only building/speculating for their own Spanish clients but merely also for buyers from abroad (read: Northern Europe) but...who staid away, leaving Spain in a mess, which hasn't come to an end yet. But coming back to your concerns about the expensive €uro and Europe....I'm sure most of Thaivisa members appreciate your concerns about the Old World but why don't you worry a little more about the messy situation in your own country ? You are a master, talking about <deleted> in other parts of the world; I suggest you pay a little more attention to the problems within your own borders, like some 47 Million Americans without a health insurance (that's 15.6% of the total US population) and 2,319,258 Americans in jail or prison at the start of 2008; that's 1 to every 100 Adult Americans and a World record....costing a staggering $49 billion on corrections in 2007 up from less than $11 billion 20 years earlier..... just to name a few problems.... I sincerely hope your country delivers the world a TOP New Administration in 2009 and that we may see a better one than in the past 8 years. Have a nice weekend. LaoPo Spain IS NOT an unique case, housese prices in Italy are falling too, in Latvia they have fallen by 10% after the bubble burst few months ago and many east european countries are experiencing housing prices falling. Newspapers and online news are very good to talk about hosuing cirsis in the USA but they dont say prices are falling in some european countries too. A friend of mine has just sold a 64sqm condo in a wonderful hill with vista location outside Rome for 195K euro, when he bought it 10 years ago at equivalent of 155K euro. 15 months ago it could sell it easily at 220k euro. Edited March 3, 2008 by maxcrc Link to comment Share on other sites More sharing options...
Naam Posted March 3, 2008 Share Posted March 3, 2008 Highest level of $ vs. euro was 8 years ago in 2000 electoral year after Democrat Govt. (strong dollar policy, Mr. Clinton , Hillary's husband). incorrect. highest level USD/EUR was thu jan 31st, 2002 @ 2.2762 I dont understand. Why everywhere it is given the following "The minimum value of the euro-dollar exchange rate was 0.825 in October 2000.". What rate was on jan 31st exactly ? Maybe there is a difference between daily rate (at the end of teh day) and the max, peak during the section. Anyway, we can say that dollar fast galopping stops on October 2000, than some ups and downs until 2002 occurred before $ started to fell sharply at the end of that year (and I did well to sell dollars in July 2002). i apologise Max! i checked again and got conflicting information. from another website i got a low (which tallies with your statement) of: 2000/10/25 Wed 0.82737 (NY close) http://fx.sauder.ubc.ca/cgi/fxdata Link to comment Share on other sites More sharing options...
maxcrc Posted March 3, 2008 Share Posted March 3, 2008 Highest level of $ vs. euro was 8 years ago in 2000 electoral year after Democrat Govt. (strong dollar policy, Mr. Clinton , Hillary's husband). incorrect. highest level USD/EUR was thu jan 31st, 2002 @ 2.2762 I dont understand. Why everywhere it is given the following "The minimum value of the euro-dollar exchange rate was 0.825 in October 2000.". What rate was on jan 31st exactly ? Maybe there is a difference between daily rate (at the end of teh day) and the max, peak during the section. Anyway, we can say that dollar fast galopping stops on October 2000, than some ups and downs until 2002 occurred before $ started to fell sharply at the end of that year (and I did well to sell dollars in July 2002). i apologise Max! i checked again and got conflicting information. from another website i got a low (which tallies with your statement) of: 2000/10/25 Wed 0.82737 (NY close) http://fx.sauder.ubc.ca/cgi/fxdata I know why. The website you checked was referring only to the current euro, when it came out in january 2002. So my 8 years cycle theory is not just a theory, at least for the past decades has been a FACT. It doesn t mean it will work indefinitely like this, but I am very convinced. Hillary would have been the best guarantee of a strong dollar policy (her husband would have been the effective man in charge) but it looks like she could be virtually out by tomorrow. We will see. Link to comment Share on other sites More sharing options...
LaoPo Posted March 3, 2008 Author Share Posted March 3, 2008 Spain IS NOT an unique case, housese prices in Italy are falling too, in Latvia they have fallen by 10% after the bubble burst few months ago and many east european countries are experiencing housing prices falling.Newspapers and online news are very good to talk about hosuing cirsis in the USA but they dont say prices are falling in some european countries too. A friend of mine has just sold a 64sqm condo in a wonderful hill with vista location outside Rome for 195K euro, when he bought it 10 years ago at equivalent of 155K euro. 15 months ago it could sell it easily at 220k euro. I didn't say that Spain is a unique case but the fact remains that it is a unique case, in a way, as there is no other country on the European mainland which built so many -huge quantities- of houses in the past few years than Spain. The consequences of that fact will leave it's marks for many years to come.... That doesn't mean that prices aren't under pressure elsewhere too, like you said, in Italy. A SqM2 price of € 3.000/M2 is quite stiff for a small condo of 64 M2, down from € 3.400, even for outside Rome, wouldn't you say...? It's obvious that people aren't paying the asking prices anymore, the same is happening in London, where prices are under pressure also but not everywhere. I think we should leave countries like Latvia out of this discussion (a mere 2.2 Million people) as well as other Eastern European countries. It's the same as comparing former Eastern Germany with Western Germany; it doesn't make sense. BUT, to compare the European real estate market with the one in the US is comparing mice with elephants. It's simply impossible. Laopo Link to comment Share on other sites More sharing options...
LaoPo Posted March 12, 2008 Author Share Posted March 12, 2008 US $ against Euro plunged to record low: 1.5550 NEW YORK (Reuters) - The dollar plunged to a record low against the euro and a basket of currencies on Wednesday amid uncertainty about the long-term impact of the Federal Reserve's recent efforts to inject money into cash-starved credit markets. The greenback rallied on Tuesday after the Fed said it would lend primary dealers $200 billion in Treasury securities and accept a wider array of mortgage debt as collateral to ease tight credit conditions. But those gains were wiped out on Wednesday when the euro climbed above $1.5550 for the first time in its nine-year history, as investors wondered whether the Fed's plan would be sufficient to revive credit markets and boost a struggling U.S. economy. "My sense is that the Fed's credit facility was too little, with trillions of dollars in bad debt out there," said Paul Lennox, corporate treasurer at Custom House, the largest non-bank global payments and currency dealer in Victoria, Canada. "So we're back to thinking that the Fed will cut by 75 basis points instead of 50. And they're probably not done from there just yet," he added. Continued here: http://www.reuters.com/article/businessNew...;feedName=usdai Dollar Falls to Lowest Since '95 Versus Yen; Bush Cites Decline March 13 (Bloomberg) -- The dollar fell to the lowest since 1995 against the yen after U.S. President George W. Bush said the dollar is ``adjusting.'' The U.S. currency also slid to a record low against the euro as Bush said its decline was not ``good tidings'' for proponents of a strong dollar. It traded near an all-time low versus the Swiss franc before a government report today that may show U.S. consumer spending slowed as record high oil prices sap purchasing power. ``Bush's comments were about as lukewarm as you can get,'' said Brian Dolan, research director at Forex.com, a unit of currency trading firm Gain Capital in Bedminster, New Jersey. ``Some may have interpreted his `adjusting' comment as tacit acceptance that we're in a broad-based dollar devaluation.'' The dollar traded at $1.5535 per euro at 8:27 a.m. in Tokyo from $1.5551 in late New York yesterday. It touched $1.5573 per euro, the weakest level since the European currency's 1999 debut. The U.S. currency traded at 101.49 yen after reaching 101.10, the lowest since December 1995. The dollar bought 1.0158 Swiss francs, just above a record low of 1.0128 reached yesterday. The British pound was little changed at $2.0267. Continued here: http://www.bloomberg.com/apps/news?pid=206...&refer=news LaoPo Link to comment Share on other sites More sharing options...
LivinLOS Posted March 13, 2008 Share Posted March 13, 2008 Is Paulson gonna do that neat trick of jawboning a 'strong dollar policy' without even cracking a smile ?? Comedy gold that man !! EUR flirting with 1.56.. Yen and an eye watering 100.25 (carry trade fear).. GBP only around 2.036.. Link to comment Share on other sites More sharing options...
LaoPo Posted March 13, 2008 Author Share Posted March 13, 2008 Paulson to Propose Tougher Bank Scrutiny After Mortgage Crisis http://www.bloomberg.com/apps/news?pid=206...&refer=news .......if it wasn't so serious it's almost laughable...."Propose Tougher Bank Scrutiny..."...a bit late I would say. Whatever some posters here say about Europe, most European banks didn't make such a mess with their mortgage allowances as US banks did... Scrutiny by EU banks is tough, quite tough actually. LaoPo Link to comment Share on other sites More sharing options...
zink Posted March 13, 2008 Share Posted March 13, 2008 EURUSD = 1.5610 USDJPY = 100.06 Soon we will have USDTHB = 25 once again... Link to comment Share on other sites More sharing options...
Naam Posted March 14, 2008 Share Posted March 14, 2008 EURUSD = 1.5610USDJPY = 100.06 Soon we will have USDTHB = 25 once again... we sure would be lost without the prophets on thaivisa Link to comment Share on other sites More sharing options...
LaoPo Posted March 14, 2008 Author Share Posted March 14, 2008 Dollar Rebounds From Record Versus Euro on Intervention Concern ..as I write the $/€ is 1,556... March 14 (Bloomberg) -- The dollar rose from a record low against the euro and traded above 100 yen as securities firms speculated central banks will intervene for the first time in 13 years to shore up the U.S. currency. Goldman Sachs Group Inc. and Morgan Stanley said coordinated action by policy makers to stem the currency's slide is increasingly likely. The gains limited the dollar's losses in a week when it fell to the lowest in 12 years against the yen, approached parity with the Swiss franc and traded above $2 per U.K. pound. ``The market is certainly on intervention watch,'' said Hans- Guenter Redeker, global head of currency strategy in London at BNP Paribas SA, France's largest bank. ``If I was in their shoes I would intervene in a concerted way that supported the dollar.'' The U.S. currency rose to $1.5565 against the euro by 6:47 a.m. in New York, from $1.5635 yesterday. Earlier it fell to $1.5651, the weakest since the European currency's debut in 1999. The currency was at 100.63 yen, after dropping to 99.85 yen, from 100.65 yesterday. The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, fell to a record low of 71.701 today. The dollar has lost 47 percent of its value against the euro during its five-year slide as widening budget and trade deficits raised concern about the capability of the U.S. to attract foreign money. Continued here: http://www.bloomberg.com/apps/news?pid=206...&refer=home LaoPo Link to comment Share on other sites More sharing options...
maxcrc Posted March 14, 2008 Share Posted March 14, 2008 Dollar Rebounds From Record Versus Euro on Intervention Concern The dollar has lost 47 percent of its value against the euro during its five-year slide as widening budget and trade deficits raised concern about the capability of the U.S. to attract foreign money. LaoPo Right. But the dollar had also fallen MORE THAN 50% versus the synthetic euro in only 7 years from 1985 to 1992, after the GEORGE SENIOR BUSH administration and bottomed 2 MONTHS BEFORE elections. After that it started recovering before peaking up 8 years later 1 MONTH BEFORE elections won (?) by GEORGE JR. Ladies and Gentlemen ,Welcome to the world of coincidences ...! Link to comment Share on other sites More sharing options...
LaoPo Posted March 14, 2008 Author Share Posted March 14, 2008 Weak dollar costs U.S. economy its No. 1 spot Fri Mar 14, 2008 5:17pm EDT PARIS (Reuters) - The U.S. economy lost the title of "world's biggest" to the euro zone this week as the value of the dollar slumped in currency markets. Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the United States when the European currency surged to a record high of more than $1.56 per euro. "The curious outcome of breaching this latest milestone is that the size of the euro zone's annual output has now exceeded that of the U.S.," the economics department of Goldman Sachs, the Wall Street investment bank, said in a note to clients. Taking official estimates of 2007 GDP -- $13,843,800 billion for the United States and 8,847,889.1 billion euros for the euro zone -- the economy of the latter passed the United States once converted into dollars, shortly after the euro topped $1.56. The dollar sank to $1.5688 per euro late in European trading hours on Friday, at which rate the euro zone's 2007 GDP equates to $13,880,568.4 billion. The 2007 GDP estimates are as published by the U.S. Commerce Department's Bureau of Economic Analysis and provided to Reuters on request for the euro zone by Eurostat, the European Union's statistics office. http://www.reuters.com/article/newsOne/idUSL1491971920080314 LaoPo Link to comment Share on other sites More sharing options...
LaoPo Posted March 14, 2008 Author Share Posted March 14, 2008 (edited) :D Bear Stearns Drama on Wall Street: minus -47,37% in one day... BSC: Bear Stearns: Bear Stearns, the fifth largest U.S. investment bank, on Friday said a cash crunch forced it to turn to the Federal Reserve and JPMorgan Chase for emergency funds, intensifying fears of a widening global credit crisis and driving its shares down as much as 50 percent. REUTERS/Graphics Friday March 14, 2008: -47,37% Since Jan 1: -66% The FED and (rival) JPMorgan supplied emergency funds to save the 85 year old 5th largest Investment Bank in the US. It's scary...too many financials/banks and mortgage banks are in trouble now in the US... Sources: http://www.reuters.com/article/topNews/idUSN1440594920080314 http://www.bloomberg.com/apps/news?pid=206...&refer=news http://www.forbes.com/markets/feeds/afx/20...afx4776080.html LaoPo Edited March 14, 2008 by LaoPo Link to comment Share on other sites More sharing options...
LaoPo Posted March 15, 2008 Author Share Posted March 15, 2008 Q&A: Bear Stearns banking crisis Friday, 14 March 2008, 15:50 GMT US investment bank Bear Stearns has had to be rescued from collapse by the US central bank. But how serious is this development for the future of the banking system, and what does it say about the credit crunch? How big is Bear Stearns? Bear Stearns is one of the major US investment banks which have dominated Wall Street for generations. Founded in 1923, it is one of the leading global banking firms that operates at the wholesale level, dealing with governments, companies and other financial institutions. Its core business lines include buying and selling stocks, government and corporate bonds, investment banking, global clearing services, asset management, and private client services. Before the crisis, it had a market capitalisation of $60bn and assets under management of $350bn, and a global workforce of 15,000. Why is the bank in trouble? Bear Stearns has been severely affected by the loss of confidence in credit markets. The company had invested heavily in sub-prime mortgage instruments and other securities which are now seen as highly risky, and which have fallen sharply in value. And it had less capital than its rivals, such as Citigroup and Merrill Lynch, who were also heavily exposed, to plug the gap. Last summer, two of Bear Stearns' hedge funds had to be bailed out, partly precipitating the first stage of the global credit crunch. Now other banks have become unwilling to lend short-term money to Bear Stearns to keep its operations going. And that has meant that it no longer has enough cash on hand, known as liquidity, to fund its operations. How dangerous is the situation? The worry is that if Bear Stearns collapsed, it would be forced to sell its assets, such as sub-prime mortgage securities, into the market at cut down prices. This would have lowered their value even further. And that could have affected the solvency of many other big US banks. And if other big banks went bust, then credit would dry up rapidly across the whole economy, slowing economic activity. That is why the New York Federal Reserve felt it had no choice but to intervene to support a short-term rescue deal. But there may be other banks that are already at risk of reaching a similar position to Bear Stearns. Why is the rescue being carried out by JP Morgan Chase? For technical reasons, Bear Stearns was unable to borrow money directly from the New York Federal Reserve, because it is not a commercial bank. So the money is coming from one of the biggest US commercial banks instead. However, they will be able to borrow any of the funds they need for the rescue from the Fed, so their shareholders will not be exposed to any risks. So they are essentially a conduit for the Fed bail-out. The Fed's new $200bn emergency loan facility only comes into effect on 27 March. Will the bank survive in its current form? It is not clear that Bear Stearns can survive intact. It is essentially now at the mercy of the market. JP Morgan Chase, has only committed to provide cash for 28 days, as long as it is underwritten by the US central bank. JP Morgan Chase is also looking at how to provide long-term financing, and there may be international investors or other banks who want to invest in the stricken bank. But if it cannot find anyone who wants to back it, then its future may be bleak. Bear Stearns could be broken up or taken over by JP Morgan. Or it could sell a big equity stake to a foreign investor, such as a sovereign wealth fund. http://news.bbc.co.uk/2/hi/business/7296827.stm LaoPo Link to comment Share on other sites More sharing options...
Daisy75 Posted March 15, 2008 Share Posted March 15, 2008 GWB spending all that money on the Iraq war sure hasn't helped the dollar. Link to comment Share on other sites More sharing options...
farang1 Posted March 16, 2008 Share Posted March 16, 2008 Where's The Us$ Heading To ? Down the drain! Link to comment Share on other sites More sharing options...
steffi Posted March 16, 2008 Share Posted March 16, 2008 (edited) The recent bail out by the fed shows that when it comes to their pals in the financial sector that free markets aren't exactly free. You have to imagine going forward Bush isn't going to want to see any institution collapse whilst he's president. Sure he probably doesn't care one bit what happens after the election but until then these institutions will essentially be kept on life support. Edited March 16, 2008 by steffi Link to comment Share on other sites More sharing options...
LaoPo Posted March 16, 2008 Author Share Posted March 16, 2008 Bear Stearns, JPMorgan Strive for Sale, People Say (Update2) By Yalman Onaran and Elizabeth Hester March 16 (Bloomberg) -- Bear Stearns Cos. executives were striving today to strike an agreement to sell the crippled securities firm to JPMorgan Chase & Co. before financial markets open in Asia, people with knowledge of the talks said. The companies may announce an agreement in principle as soon as this evening in New York, giving a range of potential sale prices and leaving details of the transaction unresolved, said the people, who declined to be identified because the talks are private. Negotiations were ongoing, including with other potential bidders, and it was unclear whether a deal would be completed, they said. The Wall Street Journal reported that the sale price may be about $2.2 billion, less than $20 a share (Friday the shares closed at $30/share or Minus -47,37%; down from $ 159 one year ago.....................) and about half of the firm's $4.08 billion stock market value. Bear Stearns, led by Chief Executive Officer Alan Schwartz, was also preparing to file for bankruptcy protection if no deal is reached, the newspaper reported, citing a person familiar with the situation. JPMorgan, backed by the Federal Reserve, provided emergency funding to Bear Stearns on March 14 when the fifth-largest U.S. securities firm ran out of cash after speculation about its financial soundness prompted customers and creditors to withdraw $17 billion of assets. Bear Stearns plummeted a record 47 percent to $30 in New York trading, pulling down financial stocks and sparking concern that other Wall Street firms could be affected. `Do What It Takes' ``Right now it's a very potent short-term problem,'' said Brian Barish, who manages about $8 billion as president of Denver-based Cambiar Investors LLC. ``If Bear fails you're going to augment this liquidity problem materially because all kinds of trades are going to fail and people are going to be stuck with Bear as a counterparty. So it's better to find a way to handle Bear.'' Russell Sherman, a spokesman for Bear Stearns, declined to comment. JPMorgan spokeswoman Kristin Lemkau didn't return phone calls seeking comment. ``None of these things is done until they're done,'' Treasury Department spokeswoman Michele Davis said today, adding that Treasury Secretary Henry Paulson was involved in the discussions. ``The government is prepared to do what it takes to maintain the stability of our financial system,'' Paulson told the ``Fox News Sunday'' television program in Washington today. ``Our focus, our No. 1 priority, is the stability of our financial system.'' Teams of Bankers J.C. Flowers & Co., the New York-based private equity firm, is among the other potential bidders that have been in contact with Bear Stearns since its cash shortage surfaced, according to people familiar with the matter. Ed Grebow, a spokesman for J.C. Flowers, didn't return a call seeking comment. Kohlberg Kravis Roberts & Co. was also involved alongside Flowers, the Journal reported today on its Web site, citing a person familiar with the discussions. Hundreds of Bear Stearns employees worked yesterday to help with the process along with teams of bankers from JPMorgan who descended on Bear Stearns's 45-story headquarters on Madison Avenue in midtown Manhattan, people with knowledge of the matter said. A sale for $2.2 billion, or less than $20 per share, would mean that Bear Stearns's value has fallen more than 88 percent from its peak of $171.51 in January 2007. The 85 year-old firm paid employees $3.43 billion last year. Prime Asset Bear Stearns's prime brokerage, which provides loans and processes trades for hedge funds, is a potentially desirable asset for JPMorgan, which has said it wants to buy such a business. The Bear Stearns unit generated $1.2 billion in revenue last year. Talks between the two New York-based firms have moved beyond that business and an outright acquisition of Bear Stearns is under discussion, the people familiar with the talks said. JPMorgan and rival banks and securities firms are trying to find additional revenue streams after the collapse of the subprime mortgage market forced them to absorb more than $195 billion of writedowns and losses since the start of last year. Bear Stearns's prime brokerage was the third-largest behind Goldman Sachs Group Inc. and Morgan Stanley as of April 2007, according to Sanford C. Bernstein & Co. analyst Bradley Hintz. ``Prime brokerage is a fee-based business that has a fairly steady revenue and income through all market cycles,'' said Glen Dailey, head of Jefferies Group Inc.'s prime brokerage in New York. ``As long as people buy or sell it makes money.'' Dailey ran Bank of America Corp.'s prime brokerage from 1997 until 2006. `Too Late' JPMorgan, led by Chief Executive Officer Jamie Dimon, was tapped March 14 for the bailout, after Bear Stearns's cash position had ``significantly deteriorated'' the previous day, company officials said. JPMorgan agreed to help the New York Fed provide financing for up to 28 days. Steven Black, co-CEO of JPMorgan's investment bank, said Feb. 27 that the firm was considering an opportunity to buy a prime brokerage from an unnamed seller. Bank of America, based in Charlotte, North Carolina, said on Jan. 15 that it planned to sell its prime brokerage. Dimon said three years ago that he didn't see the point of trying to compete with the likes of Morgan Stanley or Goldman in prime brokerage for stock trades. It's ``just too late,'' he said on a January 2005 conference call. Instead, he said he would focus on serving hedge funds in debt trading. Customer Defections Buying a business with a damaged reputation carries its own risks. Prime brokerage customers have been leaving Bear Stearns since last summer, said Bob Sloan, managing partner of S3 Partners, a New York-based company that serves as an outside financing desk for hedge funds. There's little incentive to return once they've departed, said Sloan, whose clients have withdrawn a total of $25 billion from Bear Stearns. ``When Bear passed around a circular in July saying everything was safe and secure and funding was not a problem, we recommended to all our clients to pull,'' said Sloan, who ran Credit Suisse First Boston's prime brokerage for six years until 2002. Bear Stearns, which first sold shares to the public in 1985, helped trigger a crash in the market for home loans to borrowers with blemished credit histories after two of its hedge funds collapsed in July. The failure of the funds, which invested in securities linked to subprime mortgages, prompted a sell-off of the assets, which led investors to shun other high- yield debt. Hintz, the Sanford Bernstein analyst, said a takeover by JPMorgan may not revive the securities firm. ``Unfortunately it's easy to concoct a scenario that says this becomes a run-off strategy,'' Bernstein's Hintz said. ``It doesn't mean the assets aren't worth anything, it doesn't mean the franchise isn't worth anything, but I'm not at all certain how you put the defibrillators on and jumpstart the company again.'' http://www.bloomberg.com/apps/news?pid=206...58&refer=us LaoPo Link to comment Share on other sites More sharing options...
LaoPo Posted March 17, 2008 Author Share Posted March 17, 2008 The previous estimated $20/share for Bear Stearns was a bit optimistic.... Bear Stearns is sold for $2/share to JP Morgan....whilst the Central Bank: "will provide financing for the transaction, including support for as much as $30 billion of Bear Stearns's ``less-liquid assets,'' JPMorgan Chase Buys Bear Stearns for $270 Million (Update1) By Yalman Onaran March 16 (Bloomberg) -- JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for about $270 million after a run on the company ended 85 years of independence for Wall Street's fifth- largest securities firm and prompted a bailout by the Federal Reserve. The deal values New York-based Bear Stearns, with 14,000 employees, at $2 a share, compared with $30 at the close on (last Friday) March 14. The central bank will provide financing for the transaction, including support for as much as $30 billion of Bear Stearns's ``less-liquid assets,'' the two companies said in a statement today. JPMorgan Chief Executive Officer Jamie Dimon had the upper hand in negotiations after coming to the smaller firm's rescue last week with a cash infusion engineered by the Federal Reserve Bank of New York. Bear Stearns's CEO, Alan Schwartz, faced the prospect of bankruptcy as clients pulled $17 billion in two days last week and creditors stopped renewing loans. ``JPMorgan Chase stands behind Bear Stearns,'' Dimon said in the statement. ``Bear Stearns's clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns's counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.'' Bear Stearns's sale to JPMorgan caps an eight-month slide in the company's fortunes that began last July with the collapse of two of its hedge funds. Those failures sparked a wider market concern that called into doubt the value of any asset linked to the mortgage market, Bear Stearns's biggest business. Market Deterioration Without a resolution this weekend, the situation would probably have continued to deteriorate when markets resumed trading tomorrow, according to analysts and investors including Cambiar Investors LLC's Brian Barish. ``The past week has been an incredibly difficult time,'' Schwartz said in the statement. ``This transaction represents the best outcome for all of our constituencies based upon the current circumstances.'' The Fed's rescue attempt last week failed to avert a crisis of confidence among Bear Stearns's customers and shareholders, who drove the stock down a record 47 percent after the cash infusion was announced. Bear Stearns's profit exceeded $2 billion in 2006, yet the price JPMorgan is paying is about one quarter the value of the securities firm's headquarters building in midtown Manhattan. The 1.2 million-square-foot, 45-story structure built in 2001 is worth about $1.2 billion, based on the average $1,000 per- square-foot that comparable office space in the city is currently fetching. Counterparty Risk ``If you're buying equity for free and the liabilities are pretty well capped, it sounds like it's good for JPMorgan shareholders,'' said Ben Wallace, who helps manage $800 million, including shares of JPMorgan, at Grimes & Co. in Westborough, Massachusetts. ``The thing that everybody's been worried about has been the counterparty risk and if this gives people more confidence, that will be good for the markets.'' Bear Stearns's prime brokerage unit, which provides loans and processes trades for hedge funds, generated $1.2 billion in revenue last year. That business is probably the only piece left of the company with value after the mortgage market collapsed last year, analysts have said. The prime brokerage was the third-largest behind Goldman Sachs Group Inc. and Morgan Stanley as of April 2007, according to Sanford C. Bernstein & Co. About a sixth of the firm's income came from packaging and trading mortgage bonds, a market that has been almost completely frozen since July. `A Lot of Value' ``As bad as things are at Bear Stearns, this is still a franchise with a lot of value, particularly the prime brokerage business, which is what JPMorgan is after,'' said William Fitzpatrick, who helps manage $1.6 billion at Optique Capital Management, including JPMorgan shares. ``That's the crown jewel, and that would fit into JPMorgan's business extremely well.'' Dimon's New York-based firm has suffered fewer losses than rivals during the credit-market contraction, which has prompted $195 billion of writedowns and losses by Wall Streets biggest banks and securities firms. JPMorgan, the third-largest U.S. bank by assets, has posted $3.7 billion in writedowns, a fraction of the $22.4 billion reported by New York-based Citigroup Inc., the biggest U.S. bank. Crisis of Confidence ``It'll be perceived as a positive for the markets,'' said E. William Stone, who oversees $77 billion as chief investment strategist at PNC Wealth Management in Philadelphia. ``It puts a floor under all the financials. The longer-term thesis is that the Fed won't let good companies fail based on lack of liquidity and a crisis of confidence.'' Treasury Secretary Henry Paulson defended the Fed's bailout today, saying policy makers will do whatever is needed to prevent disruptions in financial markets from hurting the economy. Paulson said he was involved with the discussions on Bear Stearns's future this weekend, without elaborating. ``There's always a decision to be made to say what's best for the stability of the marketplace, the orderliness of the marketplace,'' Paulson said. ``I think we made the right decision.'' Bear Stearns, founded in 1923, survived the Great Depression and first sold shares to the public in 1985. Schwartz, an executive with more than 30 years of experience at Bear Stearns, was the hand-picked choice of his predecessor, James ``Jimmy'' Cayne, 74, who remains non-executive chairman of the firm. Bridge Game Cayne stepped down after reporting an $854 million fourth- quarter loss, the first in the company's history. He was at a bridge tournament in Detroit last week as the firm faced speculation about its cash position. Cayne came under fire last July for playing golf and bridge while the hedge funds collapsed. On a conference call with analysts and investors after the bailout announcement on March 14, Schwartz said the company's book value was ``fundamentally'' unchanged. Clients continued to withdraw funds, he said. The book value was about $80 a share at the end of November. When Bear Stearns invited potential buyers for detailed presentations by department chiefs yesterday, only JPMorgan and private equity firm J.C. Flowers & Co. showed up, according to people familiar with the talks. Other Buyers Other potential buyers, such as Royal Bank of Scotland Group Plc and HSBC Holdings Plc, which had expressed interest in the past, didn't send representatives. Hundreds of Bear Stearns employees went to work yesterday to help with the sale process and the presentations. Bear Stearns has offices in cities including London, Tokyo, Hong Kong, Beijing, Shanghai, Singapore, Milan and Sao Paulo, according to its Web site. Joseph Lewis, the second-largest shareholder in Bear Stearns Cos., wasn't planning to reduce his stake, a person close to him said March 11. Lewis, a 71-year-old billionaire, has put in more than $1 billion into the firm since September, paying as much as $150 for a share. JPMorgan's participation in the bailout follows a long tradition at the bank of stepping in to rescue financial markets from crisis, according to Charles Geisst, the author of ``100 Years on Wall Street.'' The bank has also profited from others' crises. JPMorgan got at least $725 million of revenue for taking on half the energy trades from collapsed hedge fund Amaranth Advisors LLC in 2006. http://www.bloomberg.com/apps/news?pid=206...&refer=news NEXT ? LaoPo Link to comment Share on other sites More sharing options...
LaoPo Posted March 17, 2008 Author Share Posted March 17, 2008 (edited) Meanwhile, the Dollar passed the 1,57 to the Euro and hit 1,58 already... http://www.reuters.com/article/usDollarRpt...F00079120080316 LaoPo Edited March 17, 2008 by LaoPo Link to comment Share on other sites More sharing options...
LaoPo Posted March 17, 2008 Author Share Posted March 17, 2008 FED in weekend emergency meeting: U.S. Fed Cuts Discount Rate -to 3,25%- for commercial loans to Banks The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities. In an announcement before the start of trading on the Tokyo Stock Exchange, the Fed lowered its so-called discount rate by a quarter of a percentage point to 3.25 percent. The central bank also approved the financing of JPMorgan Chase & Co.'s purchase of Bear Stearns Cos., including support for as much as $30 billion of Bear's assets. Fed Chairman Ben S. Bernanke is stepping up efforts to keep strains in financial markets from spiraling into a full-blown meltdown. Last week the central bank agreed to emergency loans to a non-bank, Bear Stearns, for the first time since the 1960s. Fed officials also announced a program to swap $200 billion in Treasuries for debt including mortgage-backed securities. ``The Fed needed to act decisively, and I believe it has,'' said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. ``It is a crisis of confidence that these measures are trying to'' alleviate, he said. The dollar tumbled to a 12-year low against the yen after the announcement and Treasury notes rallied in Asian trading. The Nikkei 225 Stock Average lost 3.1 percent at 9:35 a.m. in Tokyo. From tomorrow, primary dealers will be able to borrow at the rate under a new lending facility, to be in place for at least six months, the Fed said. The Fed will accept a ``broad range'' of investment-grade collateral. Bernanke Offers Assurances ``These steps will provide financial institutions with greater assurance of access to funds,'' Bernanke said during a conference call with reporters after the announcement. Treasury Secretary Henry Paulson in a statement said ``I appreciate the additional actions taken this evening by the Federal Reserve to enhance the stability, liquidity and orderliness of our markets.'' Investors expect the Fed to lower its benchmark rate by as much as a full percentage point, to 2 percent, when policy makers meet March 18. That would exceed the 0.75-point emergency reduction on Jan. 22, which is the largest Since the overnight interbank lending rate became the main tool of monetary policy about two decades ago. ``Clearly, the Fed is trying to provide more liquidity to prevent a more vicious cycle and race to the bottom,'' said Gary Schlossberg, senior economist at Wells Capital Management in San Francisco, which oversees $200 billion. ``The problem is there's so much concern about credit quality that now there are solvency issues, and it's something the Fed has a more difficult time dealing with.'' Aimed at Liquidity The actions are ``designed to bolster market liquidity and promote orderly market functioning,'' the Fed said in a statement. ``Liquid, well-functioning markets are essential for the promotion of economic growth.'' Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown. New York Fed President Timothy Geithner said on the call that ``this is designed to help get liquidity to where it can help play an appropriate role in helping address the range of challenges facing particularly asset-backed securities markets.'' http://www.bloomberg.com/apps/news?pid=206...id=asg0H5x.VQ4g LaoPo Link to comment Share on other sites More sharing options...
LivinLOS Posted March 17, 2008 Share Posted March 17, 2008 So if bear is worth 2 per share... Whats merril, lehman, goldman etc worth ??? The emperor has no clothes !! Gold up >25 in just a couple hours trade.. Link to comment Share on other sites More sharing options...
steffi Posted March 17, 2008 Share Posted March 17, 2008 Does anybody have any opinion on whether Money Market funds are safe? Specifically those based on municipalities as opposed to treasurys? Should I be looking to move money from the former to the later in the near future? So if bear is worth 2 per share... Whats merril, lehman, goldman etc worth ??? The emperor has no clothes !! Gold up >25 in just a couple hours trade.. Link to comment Share on other sites More sharing options...
LaoPo Posted March 17, 2008 Author Share Posted March 17, 2008 I don't know where this Monday will end but all stock markets in Asia/Australia and NZ are DEEP in the red.... Japan Stocks Fall to Two-Year Low on Bear Stearns Sale, Fed Cut http://www.bloomberg.com/apps/news?pid=206...r=world_indices Hong Kong Stocks Fall to 7-Month Low http://www.bloomberg.com/apps/news?pid=206...r=world_indices Everybody is scared and EU countries/Finance Ministers even called upon Banks to be open about losses due to the crisis/subprime problems in the US.... We haven't seen all of it yet, by far. LaoPo Link to comment Share on other sites More sharing options...
LaoPo Posted March 17, 2008 Author Share Posted March 17, 2008 Meanwhile, the Dollar passed the 1,57 to the Euro and hit 1,58 already... http://www.reuters.com/article/usDollarRpt...F00079120080316 LaoPo 1,587 now....it's getting bad. LaoPo Link to comment Share on other sites More sharing options...
britmaveric Posted March 17, 2008 Share Posted March 17, 2008 Wait til European Banks fess up to how much they lost. This is going to be fun. Link to comment Share on other sites More sharing options...
LivinLOS Posted March 17, 2008 Share Posted March 17, 2008 Meanwhile, the Dollar passed the 1,57 to the Euro and hit 1,58 already... http://www.reuters.com/article/usDollarRpt...F00079120080316 LaoPo 1,587 now....it's getting bad. LaoPo Wheres Vic and Brit gone ?? Link to comment Share on other sites More sharing options...
Naam Posted March 17, 2008 Share Posted March 17, 2008 Meanwhile, the Dollar passed the 1,57 to the Euro and hit 1,58 already... http://www.reuters.com/article/usDollarRpt...F00079120080316 LaoPo 1,587 now....it's getting bad. LaoPo Wheres Vic and Brit gone ?? rumour has it that they are binge drinking with my bankers and agreed not to show up till USD1=€UR1 joke aside. my banker clowns (in today's forex forecast) still insist they are bullish on USD/EUR and expect 1.35 within the next 6 months Link to comment Share on other sites More sharing options...
LivinLOS Posted March 17, 2008 Share Posted March 17, 2008 Well binge drinking would explain some of Vics predictions !!! Link to comment Share on other sites More sharing options...
LaoPo Posted March 17, 2008 Author Share Posted March 17, 2008 Wheres Vic and Brit gone ?? Good question...Don't know about Brit but VegasVic showed up in some other topic explaining how many casinos and multi Billion $ projects there were/are built in Las Vegas and how soon real estate prices were about to recover where he lives; sooner than Florida and other US parts.... But not a single reply in 'business' threads...maybe too busy counting his money or contacting his bank-connections LaoPo Link to comment Share on other sites More sharing options...
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