Dude, where's my bank?!! (Bear Stearns DEAD at 85)

[IbnMardhiyah]

This is freaking unbelievable.

David Goldman, portfolio strategist at Asteri Capital in New York and former head of debt research at Bank of America Corp., the biggest U.S. bank by market value: "This is a serious crisis. For Bear's stock price to go to effectively zero, contrary to market expectations, even at the close on Friday, tells us that something is systemically very wrong and we're at a very dangerous moment.''

One of the world's largest investment banks has collapsed, taking its place along other major collapses in banking history such as the Barings collapse. They've lost over 98 percent of their value from what it was barely two and half weeks ago, as everyone began making a run on the bank, taking out $17 billion.

JP Morgan, one of BearStearns longtime rivals, bought out the ENTIRE FREAKING bank for about $240M, that`s barely $2/share, shares that were once worth nearly $170 each!! Their 45-story HQ building alone is worth over a billion.

I told my mom about it today morning before I left for work and she laughed and said alhamdulillaah.

JPMorgan to buy Bear Stearns for $2 a share - U.S. business - MSNBC.com

Bloomberg.com: Worldwide

[Zam]

IbnMardhiyah said

This is freaking unbelievable.



One of the world's largest investment banks has collapsed, taking its place along other major collapses in banking history such as the Barings collapse. They've lost over 98 percent of their value from what it was barely two and half weeks ago, as everyone began making a run on the bank, taking out $17 billion.

JP Morgan, one of BearStearns longtime rivals, bought out the ENTIRE FREAKING bank for about $240M, that`s barely $2/share, shares that were once worth nearly $170 each!! Their 45-story HQ building alone is worth over a billion.

I told my mom about it today morning before I left for work and she laughed and said alhamdulillaah.

JPMorgan to buy Bear Stearns for $2 a share - U.S. business - MSNBC.com

Bloomberg.com: Worldwide

That's what fear does. The value of the USD (and CAD) is also decreasing at a very fast rate due to fear, so better find a hedge against it otherwise the real value of all the money you earn is being eaten away (especially for Muslims who don't take interest).

[wheelworks]

IbnMardhiyah said

This is freaking unbelievable.

It's not really that unbelievable

[Jamroll]

This is all that subprime lending, isn't it? I think they need to do something to fully regulate the subprime market. It's having serious repurcussions all over the place.

[Zam]

wheelworks said

It's not really that unbelievable

It's very surprising, if you were to ask someone in June of 2007 what the market would be like now, they could not have predicted the rapidity of the decline in certain assets since then.

[IbnMardhiyah]

Jamroll said

This is all that subprime lending, isn't it? I think they need to do something to fully regulate the subprime market. It's having serious repurcussions all over the place.

BearStearns was the leader in subprime lending / CDO offerings.

And that was their biggest mistake - they relied on it too much, so much so that their strength turned into their undoing.

The pace at which they fell is just mind-blowingly stunning. When I saw the news today morning I couldnt even speak for several minutes, I just was totally quiet. BearStearns was one of my clients at my previous job, I used to handle their Canadian IT / telecom infrastructure and related operations.

[Jamroll]

IbnMardhiyah said

BearStearns was the leader in subprime lending / CDO offerings.

And that was their biggest mistake - they relied on it too much, so much so that their strength turned into their undoing.

The pace at which they fell is just mind-blowingly stunning. When I saw the news today morning I couldnt even speak for several minutes, I just was totally quiet. BearStearns was one of my clients at my previous job, I used to handle their Canadian IT / telecom infrastructure and related operations.

We had a major high street bank here called Northern Rock almost go bust, were it not for a last minute "save" from the British government. They were dealing in funds based on subprime lending.

As in almost all things these days, the UK is only footsteps behind the US in the whole subprime thing. The subprime market is huge these days, constant ads on the TV about how we need to unlock the equity in our homes, how loans can be got even if we've been rejected elsewhere.

If it was up to me, I'd get rid of all the subprime deals and their derivatives. Even if we take our Islamic considerations out of the equation, they're such a bad idea - based on extreme short-termism and essentially what amounts to unscrupulous profiteering - and clearly detrimental for markets, locally and even globally. The problem is they're so pervasive, that increasingly, these days, a bank might not even know that the funds they're dealing with are based on subprime lending.

[elysium]

An economy ( growing by interest rates ) based upon false sense of wealth ( paper or numbers in an electronic data bank ) will always have it's sacrifices ( debt ) to be paid.

I was shocked to see this as well.. it's more so the price it was bought out at...that was shocking, not the actual demise of the bank.
I'd expected atleast half it's original value last week, I mean.. even as you stated, the building alone is worth more.
I have a feeling this is a sign of what's more to come.
Take into account forex rates and commodity ( oil, gold ) prices these days, we will see a couple more shedding of fat before end of year.
Staple food chains are also being affected as of recent past. Wheat, Corn, Rice.. etc.

The upcoming US elections are going to be super-duper-fun.

[IbnMardhiyah]

elysium said

Staple food chains are also being affected as of recent past. Wheat, Corn, Rice.. etc.

As far as I know, I haven't looked into it much, but the prices of staple grains are going up because farmers in the American breadbasket are opting to grow other grains which fetch a higher price on the global bio-fuel market, thus restricting the supply of those same staple grains and causing prices to skyrocket.

Its a reflection of how messed up things have become - in order to fix the oil dependancy problem of one nation, you're affecting the prices of staple foods for billions worldwide.

Its like a really grotesque and perverted case of robbing Peter to pay Paul.

[elysium]

You're right about the absurdity of it all.. but I suppose money talks, and people don't often think of the greater picture except personal greed. I'm just surprised about the wheat/rice shortage though, since Canada is supposed to be a greater producer of wheat.. and we're not that much into the bio-fuel ethanol craze as they are in the US.

Also, whatever happened to rice.. are people just eating too much and getting fatter?

Not too many people think about the food chain, our most important wealth

By the way.. this is a good article for the Bear Stearns case:

TheStar.com | Business | Bear Stearns orchestrated its own demise

"Bear Stearns signalled the credit crisis last summer when two of its hedge funds, stuffed with junk mortgages and other shoddy investments, could not be refinanced. Bear Stearns found it could no longer flip assets to the next sucker – a bank in Zurich, a brokerage in Frankfurt, another hedge fund in London, or a municipal government pension fund in Lyon."

Every single financial institution in today's banking world is involved in some sort of fakery or fraud.

Think about this in very simple terms.. where does money come from?
100 people paying 100 bucks a month rent require :
100 employers that payout 10000 bucks
a bank that provides this 10000 requires ... money coming from somewhere.

So, does the government/central bank just print money?
Sure -- you can say it's coming from another country, or investments, or exports or imports.. but really where is it coming from? either a central bank is electronically releasing funds ( which should technically cause heavy inflation ) or printing money. This doesn't even take into account the extra interest rate payments that need to come from somewhere for any sort of transaction, whether it's leaving the bank or - going right back to the bank eventualy. So where's the real wealth? who has it?

It's all a huge freaking game. We're just pawns.

The only real wealth anyone has is what they can hold in their hands, touch, or feel -- that isn't money. It's even better if you can eat it too

Earth is the greatest bank of all, and we seem to allow others ( smarter folks ) to sell it to us ( idiots ).

[IbnMardhiyah]

elysium said

... a bank that provides this 10000 requires ... money coming from somewhere.

It comes from fractional / reserve banking.

[zeyneddine]

IbnMardhiyah said

This is freaking unbelievable.



One of the world's largest investment banks has collapsed, taking its place along other major collapses in banking history such as the Barings collapse. They've lost over 98 percent of their value from what it was barely two and half weeks ago, as everyone began making a run on the bank, taking out $17 billion.

JP Morgan, one of BearStearns longtime rivals, bought out the ENTIRE FREAKING bank for about $240M, that`s barely $2/share, shares that were once worth nearly $170 each!! Their 45-story HQ building alone is worth over a billion.

I told my mom about it today morning before I left for work and she laughed and said alhamdulillaah.

JPMorgan to buy Bear Stearns for $2 a share - U.S. business - MSNBC.com

Bloomberg.com: Worldwide

This is pretty old news, happened late Sunday and everyone knew about it.

Lehman crashed 40% today.

What is suprising is that it was worth $170 just a year ago, $70 on Thursday, $30 on Friday and $2 on Sunday evening.

Moreoever, this particular Investment Bank had never made a loss in its history till the last quarter. It closed down two of its hedge funds dealing with subprime. However, that was not the reason it fell. The creditors refused to lend any money to the bank and demanded repayment of its obligations, which it couldnt meet. Hence...

Very sad, a lot of my friends work there.

For the uninformed, this is not a retail bank. It is an Investment and Capital Markets bank.

[Jamroll]

They're ignoring all the warning signs. And this isn't the first case either. Didn't New Century Financial file for Chapter 11 barely months ago?

[zeyneddine]

Jamroll said

They're ignoring all the warning signs. And this isn't the first case either. Didn't New Century Financial file for Chapter 11 barely months ago?

No one is ignoring warning signs. There was a huge amount of trading in Bear puts. Only the uninformed people get left out, otherwise some people have become overnight millionaires.

[Jamroll]

zeyneddine said

No one is ignoring warning signs. There was a huge amount of trading in Bear puts. Only the uninformed people get left out, otherwise some people have become overnight millionaires.

I'm talking about the subprime market in general. It's a recipe for disaster. Watch, more big players will go down because of subprime.