Forum Replies Created
-
AuthorPosts
-
davelj
Participant[quote=jficquette][quote=davelj]As much as I think the Establishment will try to move heaven and earth to make sure AIG doesn’t fail, I just don’t see how it all comes together without help from the visible hand of the government.
The problem is simple: Due Diligence. There’s no way in hell that anyone, without a backstop from the government, will provide AIG with capital without spending serious time on due diligence given the complexity of its business. I just can’t see it happening. This process would take at LEAST a month involving well over 100 professionals under normal circumstances. I realize that these aren’t normal circumstances, but how can a company put up capital in good faith without knowing what they’re signing up for? Without the government I just don’t see how AIG is saved.[/quote]
I agree however they did do the Bear Sterns deal over a 3 day weekend.
John[/quote]
True, but Jamie Dimon has admitted publicly since the Bear Stearns deal that he wouldn’t have done the deal if offered another chance to turn it down. I think proper due diligence would have revealed the folly of the transaction. Now folks know how ugly the innards of these companies are. Now they either want time to perform proper due diligence or a government backstop – which are completely rational desires. On a related topic, I believe that Ken Lewis (sorry, make that Ken Lewis’s shareholders) will rue the day he agreed to acquire Merrill on such short notice.
Participant[quote=jficquette][quote=davelj]As much as I think the Establishment will try to move heaven and earth to make sure AIG doesn’t fail, I just don’t see how it all comes together without help from the visible hand of the government.
The problem is simple: Due Diligence. There’s no way in hell that anyone, without a backstop from the government, will provide AIG with capital without spending serious time on due diligence given the complexity of its business. I just can’t see it happening. This process would take at LEAST a month involving well over 100 professionals under normal circumstances. I realize that these aren’t normal circumstances, but how can a company put up capital in good faith without knowing what they’re signing up for? Without the government I just don’t see how AIG is saved.[/quote]
I agree however they did do the Bear Sterns deal over a 3 day weekend.
John[/quote]
True, but Jamie Dimon has admitted publicly since the Bear Stearns deal that he wouldn’t have done the deal if offered another chance to turn it down. I think proper due diligence would have revealed the folly of the transaction. Now folks know how ugly the innards of these companies are. Now they either want time to perform proper due diligence or a government backstop – which are completely rational desires. On a related topic, I believe that Ken Lewis (sorry, make that Ken Lewis’s shareholders) will rue the day he agreed to acquire Merrill on such short notice.
Participant[quote=jficquette][quote=davelj]As much as I think the Establishment will try to move heaven and earth to make sure AIG doesn’t fail, I just don’t see how it all comes together without help from the visible hand of the government.
The problem is simple: Due Diligence. There’s no way in hell that anyone, without a backstop from the government, will provide AIG with capital without spending serious time on due diligence given the complexity of its business. I just can’t see it happening. This process would take at LEAST a month involving well over 100 professionals under normal circumstances. I realize that these aren’t normal circumstances, but how can a company put up capital in good faith without knowing what they’re signing up for? Without the government I just don’t see how AIG is saved.[/quote]
I agree however they did do the Bear Sterns deal over a 3 day weekend.
John[/quote]
True, but Jamie Dimon has admitted publicly since the Bear Stearns deal that he wouldn’t have done the deal if offered another chance to turn it down. I think proper due diligence would have revealed the folly of the transaction. Now folks know how ugly the innards of these companies are. Now they either want time to perform proper due diligence or a government backstop – which are completely rational desires. On a related topic, I believe that Ken Lewis (sorry, make that Ken Lewis’s shareholders) will rue the day he agreed to acquire Merrill on such short notice.
September 15, 2008 at 10:24 PM in reply to: Lehman Said to Prepare Bankruptcy as Buyers Withdraw (BofA to pick up Merril Lynch) #270766Participant[quote=TheBreeze][quote=davelj]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.[/quote]
Your explanation sounds perfectly plausible in this environment.
[/quote]Actually, I feel stupid. Mike Shedlock came up with the (obvious and) most logical explanation for the BofA/Merrill pricing silliness:
“…there is one other possible explanation for this foolishness: [BofA’s] Lewis was in a mad rush to enhance his Ego. This merger (if it goes through) would create a behemoth that would rival Citigroup (C) in terms of assets under management. Lewis, in an impatient state did not care what he paid to achieve that fame.”
Makes perfect sense to me.
September 15, 2008 at 10:24 PM in reply to: Lehman Said to Prepare Bankruptcy as Buyers Withdraw (BofA to pick up Merril Lynch) #271003Participant[quote=TheBreeze][quote=davelj]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.[/quote]
Your explanation sounds perfectly plausible in this environment.
[/quote]Actually, I feel stupid. Mike Shedlock came up with the (obvious and) most logical explanation for the BofA/Merrill pricing silliness:
“…there is one other possible explanation for this foolishness: [BofA’s] Lewis was in a mad rush to enhance his Ego. This merger (if it goes through) would create a behemoth that would rival Citigroup (C) in terms of assets under management. Lewis, in an impatient state did not care what he paid to achieve that fame.”
Makes perfect sense to me.
September 15, 2008 at 10:24 PM in reply to: Lehman Said to Prepare Bankruptcy as Buyers Withdraw (BofA to pick up Merril Lynch) #271017Participant[quote=TheBreeze][quote=davelj]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.[/quote]
Your explanation sounds perfectly plausible in this environment.
[/quote]Actually, I feel stupid. Mike Shedlock came up with the (obvious and) most logical explanation for the BofA/Merrill pricing silliness:
“…there is one other possible explanation for this foolishness: [BofA’s] Lewis was in a mad rush to enhance his Ego. This merger (if it goes through) would create a behemoth that would rival Citigroup (C) in terms of assets under management. Lewis, in an impatient state did not care what he paid to achieve that fame.”
Makes perfect sense to me.
September 15, 2008 at 10:24 PM in reply to: Lehman Said to Prepare Bankruptcy as Buyers Withdraw (BofA to pick up Merril Lynch) #271057Participant[quote=TheBreeze][quote=davelj]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.[/quote]
Your explanation sounds perfectly plausible in this environment.
[/quote]Actually, I feel stupid. Mike Shedlock came up with the (obvious and) most logical explanation for the BofA/Merrill pricing silliness:
“…there is one other possible explanation for this foolishness: [BofA’s] Lewis was in a mad rush to enhance his Ego. This merger (if it goes through) would create a behemoth that would rival Citigroup (C) in terms of assets under management. Lewis, in an impatient state did not care what he paid to achieve that fame.”
Makes perfect sense to me.
September 15, 2008 at 10:24 PM in reply to: Lehman Said to Prepare Bankruptcy as Buyers Withdraw (BofA to pick up Merril Lynch) #271083Participant[quote=TheBreeze][quote=davelj]
In this whole bizarre mess, the price BofA is paying for Merrill is the most bizarre. Normally I can come up with some oddball potential explanation. But this one? Can’t do it. I’m mystified.
But I’m assuming it has some tie into saving BofA’s ass in the end. For example, if allowing Merrill to fail after Lehman failed then caused BofA to go down the tubes as a result (due to a lack of confidence in the system) then MAYBE BofA figured: “We’re the only party that can buy these clowns and we have to make it look like all of the clowns are worth something. Because if the clowns aren’t worth anything, then we’re not worth anything (even though we’re a money center bank – a higher caliber of clown than the investment banks). The illusion must be maintained that clowns are valuable. Therefore, we will use our stock (re: funny money) as a currency and buy Merrill at a premium to keep the illusion of value in tact… hopefully long enough to get us all out of the woods.”
That’s the best I can do. Totally weird.[/quote]
Your explanation sounds perfectly plausible in this environment.
[/quote]Actually, I feel stupid. Mike Shedlock came up with the (obvious and) most logical explanation for the BofA/Merrill pricing silliness:
“…there is one other possible explanation for this foolishness: [BofA’s] Lewis was in a mad rush to enhance his Ego. This merger (if it goes through) would create a behemoth that would rival Citigroup (C) in terms of assets under management. Lewis, in an impatient state did not care what he paid to achieve that fame.”
Makes perfect sense to me.
Participant[quote=TheBreeze]Holy cow! MER finished at $17.06. One cent higher than it closed on Friday despite the BAC bid at $29/shared. Effin’ amazing.[/quote]
That’s what happens when you use stock in a transaction instead of cash. If the resulting combination looks like a shit sandwich, then both companies’ stocks trade like toilet paper.
Participant[quote=TheBreeze]Holy cow! MER finished at $17.06. One cent higher than it closed on Friday despite the BAC bid at $29/shared. Effin’ amazing.[/quote]
That’s what happens when you use stock in a transaction instead of cash. If the resulting combination looks like a shit sandwich, then both companies’ stocks trade like toilet paper.
Participant[quote=TheBreeze]Holy cow! MER finished at $17.06. One cent higher than it closed on Friday despite the BAC bid at $29/shared. Effin’ amazing.[/quote]
That’s what happens when you use stock in a transaction instead of cash. If the resulting combination looks like a shit sandwich, then both companies’ stocks trade like toilet paper.
Participant[quote=TheBreeze]Holy cow! MER finished at $17.06. One cent higher than it closed on Friday despite the BAC bid at $29/shared. Effin’ amazing.[/quote]
That’s what happens when you use stock in a transaction instead of cash. If the resulting combination looks like a shit sandwich, then both companies’ stocks trade like toilet paper.
Participant[quote=TheBreeze]Holy cow! MER finished at $17.06. One cent higher than it closed on Friday despite the BAC bid at $29/shared. Effin’ amazing.[/quote]
That’s what happens when you use stock in a transaction instead of cash. If the resulting combination looks like a shit sandwich, then both companies’ stocks trade like toilet paper.
ParticipantAs much as I think the Establishment will try to move heaven and earth to make sure AIG doesn’t fail, I just don’t see how it all comes together without help from the visible hand of the government.
The problem is simple: Due Diligence. There’s no way in hell that anyone, without a backstop from the government, will provide AIG with capital without spending serious time on due diligence given the complexity of its business. I just can’t see it happening. This process would take at LEAST a month involving well over 100 professionals under normal circumstances. I realize that these aren’t normal circumstances, but how can a company put up capital in good faith without knowing what they’re signing up for? Without the government I just don’t see how AIG is saved.
-
AuthorPosts
