I think it’s pretty safe to say that Bear Streans is more or less finished.

[patientlywaiting]

From NYT article:

At its closing price of $30 a share on Friday, Bear Stearns was trading at a gaping discount to its reported book value of $80 a share.

The troubles at Bear Stearns have come quickly and savagely and hurt some of the putatively smartest money in finance. From Joseph Lewis, the Bermuda-based billionaire who bought $1 billion of Bear Stearns shares last summer, when the stock was trading at $100 and above, to William Miller, the vaunted value investor at Legg Mason, those who have wagered on a turnaround at Bear Stearns are many.

The demise of the hedge funds began a slow but persistent loss of market confidence in the bank. Such an erosion can be devastating for any investment bank, especially one like Bear Stearns, which has a leverage ratio of over 30 to 1, meaning it borrows more than 30 times the value of its $11 billion equity base.

“The public has never fully understood how leveraged these institutions are,” said Samuel L. Hayes, a professor of investment banking at Harvard Business School. “But the market makers understand this inherent risk. This is a run on the bank, just like Long-Term Capital Management, Kidder and Drexel Burnham.”

[SD Realtor]

gdcox – http://www.iamafuturestrader.com

lookedoutbelow – I purchased some puts on gs back in January and let them go a few weeks ago. Wish I would have kept em but cannot complain about taking money off the table.

SD Realtor

[SD Realtor]

gdcox – http://www.iamafuturestrader.com

lookedoutbelow – I purchased some puts on gs back in January and let them go a few weeks ago. Wish I would have kept em but cannot complain about taking money off the table.

SD Realtor

[SD Realtor]

gdcox – http://www.iamafuturestrader.com

lookedoutbelow – I purchased some puts on gs back in January and let them go a few weeks ago. Wish I would have kept em but cannot complain about taking money off the table.

SD Realtor

[SD Realtor]

gdcox – http://www.iamafuturestrader.com

lookedoutbelow – I purchased some puts on gs back in January and let them go a few weeks ago. Wish I would have kept em but cannot complain about taking money off the table.

SD Realtor

[SD Realtor]

gdcox – http://www.iamafuturestrader.com

lookedoutbelow – I purchased some puts on gs back in January and let them go a few weeks ago. Wish I would have kept em but cannot complain about taking money off the table.

SD Realtor

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[Author]

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