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-- Arrived: Recession
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you gotta hand it to them, when it comes to screwing working-class people out of money, corporate banking is fucking pro... 
JPMorgan in talks to raise Bear Stearns bid
Monday March 24, 1:12 am ET
NEW YORK (Reuters) - JPMorgan Chase & Co (NYSE:JPM - News) was in talks to quintuple its offer to buy Bear Stearns Cos (NYSE:BSC - News) to $10 per share in an effort to pacify angry Bear shareholders, The New York Times said on Monday.
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JPMorgan's original agreement on March 16 to pay $2 per share for the stricken Bear, was widely considered a fire-sale price after the Wall Street bank saw the value of its investments pummeled by a meltdown in the subprime mortgage market.
The agreement had won support of federal regulators, but the U.S. Federal Reserve is now balking at the new price, the newspaper said, citing people involved in the talks. As a result, the renegotiated merger might be postponed or collapse, the newspaper said.
A $10 per share offer would value Bear at more than $1 billion. That price, however, is less than one-third where the stock traded on March 14, the last trading day before the original merger was announced. It is also less than 10 percent where the stock traded in much of 2007.
Representatives of Bear and JPMorgan did not immediately return calls seeking comment.
According to the newspaper, Bear was seeking to authorize the sale of a 39.5 percent stake on Sunday night, freeing it under Delaware law from obtaining shareholder approval. That would leave JPMorgan needing only slightly more than 10.5 percent of shareholder support to clinch the transaction.
As part of the original transaction, the Fed extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets.
The newspaper said the central bank also directed JPMorgan to pay no more than $2 per share to assure that it would not appear that Bear shareholders were being rescued, citing people involved in the talks.
Bear shares closed Thursday at $6.39, reflecting investors' expectations that JPMorgan might raise its bid, or Bear might find another suitor to offer a sweetened price.
(Reporting by Jonathan Stempel, additional reporting by Anshuman Daga in Singapore; Editing by Jean Yoon)
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| Originally posted by diskodave JPMorgan in talks to raise Bear Stearns bid Monday March 24, 1:12 am ET NEW YORK (Reuters) - JPMorgan Chase & Co (NYSE:JPM - News) was in talks to quintuple its offer to buy Bear Stearns Cos (NYSE:BSC - News) to $10 per share in an effort to pacify angry Bear shareholders, The New York Times said on Monday. ADVERTISEMENT JPMorgan's original agreement on March 16 to pay $2 per share for the stricken Bear, was widely considered a fire-sale price after the Wall Street bank saw the value of its investments pummeled by a meltdown in the subprime mortgage market. The agreement had won support of federal regulators, but the U.S. Federal Reserve is now balking at the new price, the newspaper said, citing people involved in the talks. As a result, the renegotiated merger might be postponed or collapse, the newspaper said. A $10 per share offer would value Bear at more than $1 billion. That price, however, is less than one-third where the stock traded on March 14, the last trading day before the original merger was announced. It is also less than 10 percent where the stock traded in much of 2007. Representatives of Bear and JPMorgan did not immediately return calls seeking comment. According to the newspaper, Bear was seeking to authorize the sale of a 39.5 percent stake on Sunday night, freeing it under Delaware law from obtaining shareholder approval. That would leave JPMorgan needing only slightly more than 10.5 percent of shareholder support to clinch the transaction. As part of the original transaction, the Fed extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets. The newspaper said the central bank also directed JPMorgan to pay no more than $2 per share to assure that it would not appear that Bear shareholders were being rescued, citing people involved in the talks. Bear shares closed Thursday at $6.39, reflecting investors' expectations that JPMorgan might raise its bid, or Bear might find another suitor to offer a sweetened price. (Reporting by Jonathan Stempel, additional reporting by Anshuman Daga in Singapore; Editing by Jean Yoon) |
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| Originally posted by ninetyninej interesting to see what happens and at what price all i know is last monday i woke up at 6:30am and BSC was 3$ a share and my instinct told me to buy big because it was way undervalued and i didn't....fucking stock went up to 7$ (130% gain!@L$J:!@$J!#@:$#@DF) in 24 hours then falling to the 6 range, which was still double. now its too late to make a move imo :/ |
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| Originally posted by diskodave Well, I guarantee that the FED doesn't like a buyout price @ $10 per share... if BSC opens around $10+ tomorrow, then it might be a good daytrade to short the stock, as all the big holders DUMP their shares in the late morning/afternoon. I'd watch closely though before making any moves. |
| quote: |
| Originally posted by diskodave Well, I guarantee that the FED doesn't like a buyout price @ $10 per share... if BSC opens around $10+ tomorrow, then it might be a good daytrade to short the stock, as all the big holders DUMP their shares in the late morning/afternoon. I'd watch closely though before making any moves. |
i like what the fed did. they are very good at making people perceive that the fed is the market's magic pill.
this just tells how clueless they are, or just how bad they first tried to rip people off. now they seem to be doing anything to shut people up. i still believe $10 is a bad offer unless i see BSC's earnings that was supposed to come out on monday following the purchase on sunday.
the news is out that the JP Morgan $29B was loaned at 2.5% for 10 years. not so bad, less than $1B in interest.
Arrived: Depression
/thread. 
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| Originally posted by gehzumteufel Arrived: Depression /thread. |
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| March 26 (Bloomberg) -- Treasury Secretary Henry Paulson said the Federal Reserve should broaden its oversight to include Wall Street investment firms in a shakeup of the supervisory system set up during the Great Depression. In a speech to the U.S. Chamber of Commerce, Paulson praised the Fed's decision last week to lend to securities dealers and said the policy should be reserved for times of market stress. ``Certainly, any regular access to the discount window should involve the same type of regulation and supervision,'' he said in the remarks today in Washington. Paulson, who spent three decades on Wall Street, is finishing his yearlong review of how the American financial system is regulated. He said the Fed-orchestrated purchase of Bear Stearns Cos. by JPMorgan Chase & Co. underscores that ``the world has changed,'' and the roles of investment banks and commercial banks require regulators to ``think more broadly about the regulatory and supervisory framework.'' The Fed's role in helping to finance the rescue of Bear Stearns and the expansion of the central bank's role as lender of last resort suggest it may gain power at the expense of the Securities and Exchange Commission. ``The Bear Stearns action was a sea change,'' said Gilbert Schwartz, a former associate general counsel at the Fed, and now a partner at Schwartz & Ballen in Washington. ``The Fed should be the umbrella agency for all these institutions. The SEC is not set up to handle this.'' Congressional Review As Paulson's speech came to a close, top lawmakers on the Senate Finance Committee announced plans to review JPMorgan Chase & Co's purchase of Bear Stearns, including the Fed's investment in illiquid mortgage securities. Committee Chairman Max Baucus, a Montana Democrat, and Iowa Senator Charles Grassley, the panel's top Republican, wrote to the firms' chief executives, as well as Paulson, Fed Chairman Ben S. Bernanke, and New York Fed President Timothy Geithner seeking details on how the buyout was negotiated. Senate Banking Committee Chairman Christopher Dodd said he will hold a hearing next week to probe ``serious public-policy questions'' raised by regulators' role in the sale of Bear Stearns. The Fed set up a lending facility March 17 for the 20 primary dealers of U.S. government debt to borrow money at the discount rate -- currently 2.5 percent -- that traditional banks are charged for overnight loans. In the past, the Fed has been responsible for the safety and soundness of banks, while the SEC has overseen the Wall Street firms. |
The Fed and the Treasury forced the sale of Bear Stearns, the fifth-largest U.S. investment bank, to J.P. Morgan Chase at a price so low that a shareholder rebellion prompted J.P. Morgan to raise the price. To induce J.P. Morgan to do the deal, the Fed agreed to take losses or gains, if any, on up to $29 billion of securities in Bear Stearns's portfolio. The outcome will influence the sum the Fed turns over to the Treasury, so this is taxpayer money; that's why the Fed sought Treasury Secretary Henry Paulson's OK.
i hate always being right :<
http://www.bloomberg.com/apps/news?...id=alfGIs6CKH_o
U.S. Loses 80,000 Jobs, Unemployment Rate Increases (Update3)
By Bob Willis
Enlarge Image/Details
April 4 (Bloomberg) -- The U.S. lost jobs for a third consecutive month in March and the unemployment rate rose to the highest level since September 2005, pointing to an economy that may already be in a recession.
Payrolls shrank by 80,000, more than forecast, after a decrease of 76,000 in February that was more than initially reported, the Labor Department said today in Washington. The jobless rate rose to 5.1 percent from 4.8 percent.
http://www.bloomberg.com/apps/news?...id=aw8ifLmYMFlI
Bankruptcies Jump 30% in March, Led by Housing-Bust States
By Bill Rochelle and Bob Willis
April 5 (Bloomberg) -- The jump in March bankruptcy filings is another indication the U.S. economy is in recession, led by states where the housing boom turned to bust.
jason here it is better:
Arrived: Depression
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| Originally posted by gehzumteufel jason here it is better: Arrived: Depression |
Cosmetic surgery business sags as purse strings tighten
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| It used to be a high point of Goldy Anthony's life. Every six weeks or so, as a kind of personal morale booster, she and a group of girlfriends would make appointments to see a Beverly Hills plastic surgeon for little touch-ups -- getting lips plumped and frown lines on the forehead smoothed out. He was "an artist" with Botox and Juvederm, she said. Afterward, in a carefree mood, the ladies would dine at a popular restaurant on the Sunset Strip. No more. The sub-prime loan crisis, the housing slump and the general decline of the economy have claimed another covey of victims. Anthony is in the real estate business, and under current conditions, the cosmetic treatments -- at $1,800 or more a pop -- can no longer be squeezed into her budget. It's the same with others in the group. "We used to make appointments together," Anthony said. "Then they started saying, 'I can't go next week.' People didn't have the money, but they were ashamed to tell you." "I would rather have Botox than go out to dinner, but it's just gotten so bad," said Anthony, 41, who is looking for a job since her career in the mortgage business went sour. She has not had the facial treatments in months. And what's been happening in Beverly Hills is apparently happening around the country. After years of steady growth, the cosmetic surgery business seems to be going through a rough patch. Doctors don't like to talk about it publicly, but plastic surgeons from the Southland to South Florida said some colleagues are struggling to stay in business. |
so can we expect lower cover charges and reduced prices for drinks at the clubs now because you know we sure as hell wont be seeing lower gas prices!
Interesting outlook...
From Global Financial Crisis to Global Recession
Scenario 2008-09
Fundamental structural and in some cases radical reform of the U.S. political economy will be necessary to deal with the economic crisis. This crisis may include some of the following features:
- Widespread corporate defaults and mass layoffs occurring later in 2008 and into 2009
- Continuing revelations of further losses by banks and financial institutions
- The collapse of one or more of the mainstream banks in the U.S., setting off a major stock market correction of an additional 20-30 percent
- A further decline of 10-20 percent of the dollar in international currency markets
- Continued rise in oil and commodity prices as offshore speculators continue to take advantage of the U.S.'s worsening dual financial-devaluation crisis
- Deflation spreading from housing and other asset investments in the U.S. to goods and services. Record U.S. (unified) budget deficits of $700 billion plus
- Growing general awareness that traditional monetary and fiscal policies are increasingly ineffective in addressing financial crisis and recession
Whomever is president in 2009 will almost certainly have to confront the growing reality that the rest of the global economy is also slipping, along with the U.S., into a synchronized downturn.
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http://www.petroleumworld.com/sunopf08040601.htm
Distortions, Deceptions and Outright Lies
by Martin D. Weiss, Ph.D.
Dear Subscriber,
Beware.
The greatest threat to your financial future is not the danger you see or the beast you know. It stems from all those realities that you don't see or don't know.
This great uncertainty is not your fault. Quite the contrary, I lay the blame squarely on ...
1. Washington's distortions of its most vital economic data ...
2. Wall Street's deceptive evaluations of most of your investments, and ...
3. The outright lies that officials of both Washington and Wall Street tell you on a daily basis to cover their tracks or protect their turf.
Take Friday's news, for example.
If you thought that the surge in the U.S. unemployment rate to 5.1% was a shock, consider John Williams' Shadow Government Statistics.
First, Williams points out that the total job loss the government reported on Friday wasn't just 80,000. It was 147,000. Reason: The previous two months of job losses had been greatly understated, forcing the government to revise them by a combined 67,000.
Second, he argues that these huge revisions are no accident. They are the consequence of the government's continuing misuse of seasonal adjustments.
"If the process were honest," he writes in his Flash Update issued to paid subscribers on Friday, "the differences would go in both directions. Instead, the differences almost always suggest that the seasonal factors are being used to overstate the current month's relative payroll level, as seen last month and the month before."
Third, his analysis shows that the job numbers have a built-in bias based on a model that makes assumptions about birth and death rates. Without those distortions, he calculates there would have been additional job losses of 135,000 in February and 142,000 in March.
Fourth and most important, as you probably know, the government excludes "discouraged workers" from its count of the unemployed; and the definition of "discouraged" is highly questionable � anyone who has not looked for a job in just the past four weeks!
His conclusion: The true unemployment rate in America is not 5.1%. It's 13%, or over two and a half times worse than officially reported.
The government's distortions of other critical data are no less egregious, says Williams.
Inflation: The government reports that the Consumer Price Index (CPI) is essentially the same as it was two decades ago: It was approximately 4% in 1987, and it's near 4% right now.
But without the cumulative affect of a series of questionable adjustments made in recent decades, Williams calculates that the CPI has actually risen to almost 12%, or about three times higher than the official figures.
Economic growth: The government reports that, except for a brief interlude in the early 2000s, the U.S. economy has escaped recession throughout this decade, growing by 2% to 4% each year.
But Williams shows how, without the government's distortions of the GDP data, the opposite would be true: Except for brief interludes of mediocre growth in 2000 and 2004, the economy has been stuck in a recession throughout the entire decade.
These are vital stats that could make or break your financial future. To the degree that the shadow government stats are closer to the truth than the official versions, it means that ...
The value of your bonds is overstated because of a national complacency regarding consumer price inflation ...
The value of your stocks is overstated because of false optimism regarding the nation's employment and economic growth. And perhaps most dangerous of all ...
Trillions of dollars in derivatives � predicated on the true value of assets like stocks and bonds � could be even shakier than often feared.
This alone should be more than enough to send thousands of officials into the confessional and give millions of investors sleepless nights. But the unfortunate reality is that ...
On Top of Washington's Data Distortions,
Wall Street Adds an Equally Dangerous
Layer of Investor Deceptions
First, most of the derivatives owned by commercial banks, investment banks and so-called "non-bank banks" are kept off their balance sheets. This means that ...
The actual value and stability of the nation's largest and most important institutions are largely unknown � and probably greatly overstated.
Second, with only the rarest of exceptions, the hundreds of thousands of bond ratings issued by Fitch, Moody's, and Standard and Poor's are uniformly bought and paid for by the very same companies that are being rated. As I've written here many times, the result is that ...
There is a built-in bias in the entire system, causing inflated ratings, delayed downgrades and the continuing deception of millions of investors.
Third, brokers and brokerage firms, despite a clear self-interest to keep their clients in the stock market, are routinely allowed to play the role of "objective" advisers and managers. The result is that ...
Investors are almost universally encouraged to buy when they should be holding and to hold when they should be selling. Despite a plethora of guidelines, rules and laws created to encourage fairness, the very structure of the system continually promotes unfairness.
Lies, Lies, Lies
In this environment, the unrelenting pressure � even the mandate � to transform well-meaning public officials into chronic liars is undeniable, and the examples are many:
High-ranking government officials in the 1970s who swore the S&Ls were safe, even as thousands of thrifts were failing all around them.
FDIC and Federal Reserve officials in the 1980s who vehemently denied the threat to commercial banks, even as the bank failure rate surged to the highest since the Great Depression.
State insurance regulators in the 1990s who swore to the safety of annuities and life insurance policies, even as six million policyholders were being trapped in failed companies.
Major Wall Street firms of the early 2000s that consistently affirmed "hold" and "buy" ratings for the shares of hundreds of companies that were going bankrupt. (For our detailed study documenting these extreme deceptions, see our white paper, Crisis of Confidence on Wall Street.)
Auditing firms like Arthur Andersen, KPMG, and Deloitte and Touche that facilitated or even encouraged accounting distortions and cover-ups. (For the details, see our white paper submitted to the U.S. Senate.)
Today, the names and places may have changed. But the systemic deceptions have not.
This leaves you just two choices: Believe them and risk almost everything. Or strike out on an independent path to safety, protection and the potential for very substantial profits.
Big US student loan guarantor files for bankruptcy
Mon Apr 7, 2008 6:49pm EDT
NEW YORK, April 7 (Reuters) - The Education Resources Institute Inc, which calls itself the largest not-for-profit guarantor of U.S. private education loans, on Monday filed for Chapter 11 bankruptcy protection, saying rising defaults and credit market problems have damaged liquidity.
The company, known as TERI, filed for protection from creditors with the U.S. bankruptcy court in Boston, where it is based. It has more than $1 billion of assets, and between $500,000,001 and $1 billion of liabilities, court papers show.
TERI said it has more than $17 billion of outstanding loan guarantees, and has since its founding in 1985 guaranteed more than 2 million loans totaling in excess of $20 billion, without ever defaulting.
But a March 26 downgrade by Moody's Investors Service to "junk" status caused a bank to demand that TERI set up a reserve to support its guarantees, a move that would hurt TERI's cash position and liquidity, Chief Executive Willis Hulings said in a court papers.
He also said a slowing economy caused defaults to increase, while the disappearance of investor demand for bonds backed by student loans caused a "significant" decline in revenue.
First Marblehead Corp (FMD.N: Quote, Profile, Research), TERI's exclusive loan processing agent, has been unable to arrange securitizations, Hulings wrote.
"TERI believes that the filing of the Chapter 11 case will enable it to avoid a near-term liquidity crunch that, without the protections afforded by Chapter 11, would threaten its viability," Hulings wrote.
First Marblehead, also based in Boston, was not immediately available for comment.
TERI said it will seek court approval to retain Grant Thornton LLP as its bankruptcy restructuring adviser.
First Marblehead shares closed Monday up 29 cents at $7.70. TERI announced the bankruptcy after U.S. markets closed. (Reporting by Jonathan Stempel; editing by Gunna Dickson )
government of the corporation, by the corporation, for the corporation 
Re: Re: drumroll!
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| Originally posted by diskodave Lehman Brothers is next in line... |
The title of this thread should be changed from recession to depression as I stated very early in this thread. Especially now.
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| Originally posted by stefanoc i was just going to mention the risk of etrade but just realized theyre FDIC insured (i guess every public company is FDIC insured). does anyone know how FDIC really works? do they really give your money back right away or do they first try to liquidate a company and then try to pay off liabilities in that way? |
The sad thing is it isn't over. Not for at least another year.
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| Originally posted by djGT I wonder which bank is next in line to fail. If it's WAMU, we're all in deep do-do. Full Time Employees: 43,198 Assets: $309 Billion Liabilities: $283 Billion Current Market cap: $4.4 Billion So how many of those assets are stinking piles of horse crappola, especially since WAMU got their hands a little dirty with those Option ARMs? The FDIC might not have enough to cover this bet after Indymac's fiasco which wiped out $4-$8 billion of its $52 billion. Oh, and Indymac only had about 8,169 employees and $32 billion in assets. That damn horse is still alive! |
Bank of America to Buy Merrill Lynch for $50 Billion
By Charlie Gasparino
Bank of America said it agreed to buy Merrill Lynch in an all-stock deal worth $50 billion, snagging the world's largest retail brokerage after one of the worst-ever weekends on Wall Street.
BoFA is buying about $44 billion of Merrill's common shares, as well as $6 billion of options, convertibles, and restricted stock units.
Bank of America said it expects to achieve $7 billion in pretax expense savings, fully realized by 2012, and expects the deal to be accretive to earnings by 2010. The transaction is expected to close in the first quarter of next year.
The price, which comes to about $29 per share, represents a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007. The deal has been approved by directors of both companies. Three Merrill directors will join the Bank of America board.
Merrill plans to make an internal announcement to employees sometime between 8 and 9 a.m. New York Monday.
Merrill came under pressure to find a merger partner came after its liquidity began "evaporating" Friday and the firm became worried about a sharp decline in share price on Monday, according to people inside the firm.
Merrill is expecting huge job losses with the merger. The brokerage division will stay intact, but there will be large-scale reductions in workforce. CEO John Thain is also expected to leave.
"It's over," said one senior Merrill official.
The deal comes as Lehman Brothers Holdings prepares to file for bankruptcy after failing to find a buyer.
A Merrill Lynch spokeswoman and a Bank of America spokesman could not immediately be reached for comment. (View Charlie's round table discussion of the BoFa purchase of Merrill on the left)
Merrill, stuck with some of the same toxic debt -- much of it mortgage-related -- which torpedoed Lehman's balance sheet, has been hit hard by the credit crisis and has written down more than $40 billion over the last year.
Last month, Thain arranged to sell over $30 billion in repackaged debt securities to Dallas -based private equity firm Lone Star Funds.
"I'm surprised that Merrill Lynch would want to sell at this point," said Bill Fitzpatrick, an analyst at Optique Capital in Milwaukee. "They seem to be taking steps to improve their business. They have sold off a lot of their toxic assets. Merrill seems to be progressing to me."
In spite of these exposures, the bank is seen by some as undervalued, in part because of its massive brokerage business, which analysts have said is worth more than $25 billion.
The brokerage is the largest in the world by assets under management and number of brokers.
Merrill also has about a 45 percent stake in the profitable asset manager BlackRock, worth more than $10 billion.
"It could be a powerful fit," said Rick Meckler, chief investment officer at LibertyView Capital Management in New York.
But he added: " Merrill Lynch has significant exposures and Bank of America would need enough balance sheet to handle that."
Meckler also noted that the due diligence Bank of America would need to do on Merrill's books would be a serious undertaking, given the complexity of the company's exposure to mortgage-related securities and other complex debt.
With the brokerage and the BlackRock shares worth more than $35 billion combined, and Merrill's market capitalization at around $26 billion, investors are ascribing a negative value to the investment bank, implying huge potential embedded losses.
On the other hand, it would not be the first time Bank of America has done a quick acquisition.
In 2005, the bank bought credit card company MBNA after less than a week of due diligence, with Lewis saying the company was comfortable with the acquisition because it knew the people and business well.
Bank of America under Lewis has in fact become renowned for large acquisitions and it has spent over $100 billion since 2004 buying other companies.
Most recently it acquired troubled mortgage lender Countrywide Financial Corp and -- although many were skeptical about this purchase -- veteran analyst Dick Bove said last week the takeover could prove to be a master stroke by Lewis, since the government takeover of mortgage agencies Fannie Mae and Freddie Mac could fuel business for other lenders.
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