Bear Stearns

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FE - Yeah, I don't think we have those icons in Safari. I will look at my Windows machine at work tomorrow to see what WiINEX is talking about.
 
The Bear Stern collapse has little to do with the state of MBS of any ilk. It was a straight-up bank run, probably with a bear raid behind it (ie somebody bought Bear CDS to drive up their risk and then did a whispering campaign to take them down). It was driven IMO by some raider's assessment of panic susceptibility, not the actual state of Bear Stern. Lehman was obviously next but I think the discount window access will be enough to save them.
 
Awgee is right. However, it is unlikely for another brokerage firm to disappear like BS. The FED will simply not let it happen. LEH, ML, and MS will all study what happened to BS and work with the FED to put in any emergency facilities. Problem is how do they announce it. The mere announcement could perpetuate the problem. Counterparties could already be cutting lines and moving business elsewhere. If you think about it, the two best capitalized financial firms have already bitten the bullet for the industry - BAC acquising CFC and now JPM buying BSC. Who else can step up to rescue one of the other folks? No many others can so the FED is going to do everything in its power to make sure LEH, ML, and MS.



If need to, the FED will buy Mortgages, IG, etc using its balance sheet to avoid such a disastrous situation.



I, of course, want another one to be wiped out since I am looking to buy a house - but it is unlikely.



Only thing certain from this BSC meltdown is that MORTGAGE rates are going to zoom upward...
 
awgee - Safari is crap and won't give you the option to do a link, or a smiley, or anything fun. I switched over to Firefox a few months ago and will never go back. Just google and download it. It's pretty easy.
 
I am sorry, but can anyone explain in plain term, how it effects small people like me? Should I withdraw all my cash from the bank and dig a hole in the backyard? Honestly, I really want to learn how it will effect us?



Thank you
 
Tulip, without knowing precisely what the danger is, I would say it's time for all of us to crack each other's heads open and feast on the goo inside.
 
I should listen to my grandma.... don't save money, buy gold, but I thought we are in America now...who would buy gold? That is what banks are for, save your money in the bank.



So...now what? What steps do we need to take to protect ourselves?
 
It's hard to feel comfortable saving money right now. Technically saving money means physically holding it. Any sort of savings "account" is just a loan you gave to the bank. The bank pays you for lending it money.
 
Sorry everyone looks like I started a duplicate post - my bad!!





If Bear Stearns is only worth $2 a share in the JP Morgan buyout then how much are other banks worth then??


Helicopter Ben cuts rates today on Sunday -- increasing the speed of the printing presses.


Gas is already insane plus food prices are up with more Huge Inflation coming.


Gold or foreign investments anyone??





<a href="http://tinyurl.com/2yvfyt">tinyurl.com/2yvfyt</a>
 
MediaBoyz,



The purchase price for BS shouldn't be considered a conventional valuation. Usually, before a merger, the parties will research each other for months. In this case, the entire deal was thrown together in about 48 hours. The end price was less about BS's book value, and more about who had the capital to pull this off in such short notice, and the inclination to take on the risk. There was a very small pool of companies with both the inclination, and the capital. Just like the housing market, less buyers = lower price.
 
cdm - Sounds like BS may have had more garbage on their books than we thought, hence the low price. Its not like JP is going to pay extra when they find out theres more value than there really is....then again, perhaps this is the reason the Fed loaned $30 billion for a $230 million purchase ?? Too bad the Fed is doing all of this bailing out that each of us has to pay for. Soon it may be "Fed Subprime".
 
<p>First, OMG! But, damn you knew this was going to happen. It was a matter of time before JP Morgan bought them.</p>

<p>Second...</p>

<p><em>The Bear Stern collapse has little to do with the state of MBS of any ilk.</em></p>

<p>ROFLMAO! You have to be kidding right? Seriously, you are kidding, please, please tell me you are kidding. Do you have any idea how gawd freakin awful their MBS pools are performing? They are so bad, they make the Tan Man go pale. Awful, just awful, horribly awful is what comes to mind. Dude, you do know they have a ton of pay option ARMs that they got into late in the game, right? LOL! Yeah... it had nothing to do with their MBS, that caused their liquidity to dry up. LOL.</p>

<p>Oh... this is good. Be careful of the Lehman haters, it could bite you. Never bet against the firm that created the MBS in the first place.</p>
 
I can tell you that Bear Stearns and Lehman Bros were buying the same crap from Indymac, WAMU, and CFC. They were option-arm whores! Whatever happens to BSC can just as easily happen to Lehman Bros.
 
Bear Sterns had 17 billion in liquid assets on Tuesday. The MBS's didn't lose that in 2 days. The toxic waste in Bear's portfolio might well be the reason JPM got them basically for free but it was a bank run that took them down. It wouldn't have mattered if their portfolio was solid as a rock. I strongly suspect the run was set off deliberately by people who had placed big bets against Bear although of course I have no evidence.
 
<i>"If Bear Stearns is only worth $2 a share in the JP Morgan buyout then how much are other banks worth then??"</i><p>

Bear Stearns is worth $0. JPM overpaid. The other IBs are worth $0. But the federal reserve will back up JPM and GS, and JPM and GS will be the last standing?<p>

<i>"Bear Sterns had 17 billion in liquid assets on Tuesday. The MBS's didn't lose that in 2 days. The toxic waste in Bear's portfolio might well be the reason JPM got them basically for free but it was a bank run that took them down. It wouldn't have mattered if their portfolio was solid as a rock. I strongly suspect the run was set off deliberately by people who had placed big bets against Bear although of course I have no evidence."</i><p>

BSC's liabilites are greater than it's assets. Bear Stearns is bankrupt. The run just exposed BSC's condition. Their portfolio was not solid. It is crap. The shorts can not screw a company which has not already screwed itself. It would have mattered if Bear Stearns was solvent.
 
Given that the Fed is going to back up to $30 billion of BSC liabilities, it would seem that JPM bought BSC for -29.75 billion. That seems like a pretty good deal to me.
 
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