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Bear Stearns likely goes bankrupt

  1. Mar 14, 2008 #1
    Bear Stearns likely goes bankrupt!!

    WOW!!! After the Bear Stearns CEO goes on CNBC two days ago and says there is no liquidity problem and their financials haven't changed, today sought assistance from the fed and JP Morgan to bail them out. Stock down 45% so far today! Common stock is thought of as useless. Pensions gone. Tragedy. Will be likely bought by JP Morgan now for pennies. Also calls for insider trading last month. SEC should investigate both CEO and insiders. BSC and C have analysts. They saw this coming for everyone BUT themselves? No, I think C and BSC shareholders have been lied to.

    Interesting note: jimmy cramer, pumped this stock when it was $80, last month. whoops
     
    Last edited: Mar 14, 2008
  2. jcsd
  3. Mar 14, 2008 #2

    Astronuc

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    About this time last year, BSC stock was about $160/share, and now it's about $30/share.

    Bear Stearns gets help from Fed, J.P. Morgan
    Broker admits its liquidity 'significantly deteriorated'; mulls alternative options

    I don't suppose they'll have to give back those bonuses they paid themselves.
     
  4. Mar 14, 2008 #3
  5. Mar 14, 2008 #4

    Astronuc

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    From that article -
    If BSC doesn't declare bankruptcy, then it might be a good long term investment, that is if they fix their business model.

    After the big write-downs, some financial companies might be good bargains.

    Apparently Citibank is looking at selling some assets.

    Goldman Sachs seems to be only solid ground, since they stayed away from the subprime market. JP Morgan is probably pretty solid.
     
  6. Mar 14, 2008 #5
    A long time ago, Morgan Stanley told us to sell Microsoft short, while Bear Stearns said to buy it. My wife and I talked it over and decided to go with Morgan Stanley and take a short position. But the stock kept going higher and higher. Eventually, we had to drop our shorts and go with Bear Stearns.
     
  7. Mar 14, 2008 #6

    Astronuc

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    Shorting Bear Stearns yesterday would have been a good move. But who would've known yesterday that 24 hrs later, BSC would announce a severe liquidity problem. It would seem, someone must have realized yesterday or even the day before that there were problems - someone is just running the company on hope and prayer.
     
  8. Mar 14, 2008 #7

    Art

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    I'm not sure you can say anyone is safe at the moment.

    Northern Rock in the UK had nothing to do with sub-prime mortgages or their derivatives and still took a pasting because banks wouldn't lend to each other and their business model was based on inter-bank loans.

    Financial institutions rely totally on confidence and all it takes now is the merest hint of a rumor regarding liquidity for that confidence to instantly disappear. It's hard for depositors and investors to have confidence in financial institutions when these same institutions no longer have confidence in each other.
     
  9. Mar 14, 2008 #8
    someone's running the whole country on a hope & a prayer :rolleyes:
     
  10. Mar 14, 2008 #9

    Astronuc

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    Reflections on 1907

    Bear Stearns' bailout has echoes of 1907 panic
    J.P. Morgan, the banker and the company he founded, have played key roles

    Others are waiting for other shoes to drop, and apparently there are a lot of shoes that could drop.

    S&P thinks the worst is over and the economy should be on the rebound. Others think the current economic woes will continue into 2009.
     
  11. Mar 14, 2008 #10
    Maybe that's his problem.
     
  12. Mar 14, 2008 #11

    Astronuc

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    One man's fact is another man's fiction - or something like that.

    Ritholtz Research is next door to BSC.

    QUOTES OF THE DAY on MarketWatch
    'Ridiculous, absolutely ridiculous.'
    — Bear Stearns CEO Alan Schwartz, March 10, addressing liquidity-crunch speculation

    'Our liquidity position in the last 24 hours ... significantly deteriorated.'
    — Schwartz, March 14


    Is Lehman Brothers next?

    Bear Stearns wilts, traders smell trouble at Lehman
    Other financials also hit, including UBS and Citibank
     
  13. Mar 14, 2008 #12
    But is one person's 'parse' another's 'separate'?
     
  14. Mar 14, 2008 #13

    lisab

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    Looks like the Carlyle Group reported yesterday that they were having trouble:

    http://www.chicagotribune.com/business/chi-fri-global-markets-mar14,0,2097447.story

    And this story presumes a link between Bear Stearns and Carlyle:

    "Bear Stearns is one of largest players in the US mortgage market which is struggling under the strain of the sub-prime crisis and the ensuing credit crunch. This flows on from the collapse and winding up of a mortgage based Hedge Fund operated by US private equity group Carlyle Capital, where Bear Stearns is thought to be one of the Fund's creditors."

    http://www.easier.com/view/Finance/Investments/Funds/article-168496.html

    Wonder how many more are going to fall like Dominoes....
     
  15. Mar 14, 2008 #14

    turbo

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    Why does the Fed (taxpayer money) step in to prop up a mis-managed company? The "too big to fail" concept is a myth. Let the fools fail, and smarter, leaner, companies will start up to pick up the slack, and hopefully make better decisions. The bail-out of the over-extended savings and loan industry was shameful. These jerks got to engage in wild speculation, make obscene amounts of money as long at they were guessing right, then scream for a bail-out when it turned out they were over-extended and highly leveraged when the market turned against them.
     
  16. Mar 14, 2008 #15
    Our taxes dollars hard at work helping bail out the billionaires.
     
  17. Mar 14, 2008 #16

    Astronuc

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    I seem to remember during the last down turn in the economy, there was something about a millionaires' rescue fund to which people could contribute. One could pick a millionaire to support with a personal donation. :biggrin:
     
  18. Mar 16, 2008 #17

    Ivan Seeking

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    Some people are starting to mention the D word... but that happens every time that we have a serious downturn in the economy. I can still remember the fear on peoples faces on Black Monday.
     
    Last edited: Mar 16, 2008
  19. Mar 16, 2008 #18

    russ_watters

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    Who?
     
  20. Mar 16, 2008 #19

    russ_watters

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    I agree. All this does is encoruage risky behavior, while sending good money after bad. The Philly Enquirer interviewed a pair of economists from Drexel and Penn and they said the same thing. Short term, it keeps the downturn milder -- and so far, this one looks every bit as mild as the last one -- but long term, it makes the next one (and the next one and the next one) worse.
     
  21. Mar 16, 2008 #20

    turbo

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    That's something that the neo-cons don't get, Russ. They are deathly afraid to let market forces and competition play out in downturns. If they profess to believe in the value of a free-market economy, why do they fear allowing the market to operate? If Bear Stearns failed, there are a lot of enterprising individuals and groups willing to sweep in and pick up the pieces. If Morgan ends up owning Bear Stearns with taxpayer-funded guarantees, it will only consolidate risks and expose us to more dramatic failures.

    Real conservatives would understand these concepts, Russ. There are few real conservatives in the Republican leadership anymore, and they are shouted down by the radicals who are bent on looting the US treasury.
     
    Last edited: Mar 16, 2008
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