|
That's the name of a film about Enron.
Citigroup has smart guys like that too. They had to sell themselves,
in part, to the Saudis. We buy our oil from the Saudis. But
Vicram Pandit, CEO of Citigroup did fine with nearly a quarter of a billion last year.
Now Bear Stearns. Its CEO said don't worry, be happy
early last week. He's a smart guy. His name is Alan
Schwartz. He told us that from a very nice place in West Palm
Beach, Florida in a CNBC video. Now folks are really worried. Bear Stearns
was a bubble. Schwartz sold his company for $2 a share to JP
Morgan.
Bear Stearns had a stock market value of $20B in January 2007. On Friday, its value was 3.5B. It sold itself for $236M. A 99% discount from its Jan 07 market capitalization. Less than 1/10th its Friday value. Astounding.
The Fed financed the deal. Yes that Fed. The Federal Reserve Bank. The Fed does not give loans to me.
In a highly unusual maneuver, Fed officials said they would secure
the loan by effectively taking over the huge Bear Stearns portfolio and
exercising control over all major decisions in order to minimize the
central bank’s own risk.
We have a structural problem folks. We spend to much on
imports and ship our production overseas. Workers don't increase
their take home, even while they increase productivity. We
finance it by debt, or by selling U.S. assets. Our job creation
is in government, health care and services. Not enough to keep
up, and not enough high tech, manufucturing and other categories.
Remember
FDR's stimulus. WPA and all that. The government money was
spent in the U.S. with a reverberating economic effect. Now this
year's Stimulus Plan - tax rebates to all - will get spent on foreign
oil, to pay down credit card debt (from the banks that got us into this
mess) and foreign goods. It all leaks out.
P.S. Lehman Brothers could be the next to fall.
Other banks are not entering transactions with them. And Lehman
says its liquidity position is strong - the same thing Bear Stearns
said last week.
Lehman Brothers
Holdings Inc. Monday said the bank's liquidity position remains strong,
as the fire sale of Bear Stearns to J.P. Morgan to prevent bankruptcy
increased speculation that other big U.S. brokerages would come under
pressure.
"Our liquidity position is and continues to be strong," said Matthew
Russell, head of corporate communications for Lehman Brothers Asia
Pacific.
His statement came after people familiar with the situation said DBS
Group Holdings, Southeast Asia's biggest bank by market capitalization,
has asked several traders not to enter new transactions with Lehman
Brothers.
"DBS has sent an internal e-mail saying it would not deal with Lehman
Brothers from now on. It said DBS shouldn't enter into new dealings
with Lehman or Bear Stearns," one person said. Another person said that
the email didn't mention anything about closing existing positions with
Lehman, which appear to remain in place for now.
DBS's move follows the near-collapse of Bear Stearns Cos. Friday, a
similar pullback by counterparties caused the bank's liquidity to dry
up. J.P. Morgan Chase & Co. Monday agreed to buy Bear Stearns for
$2 a share in a bid to avert a bankruptcy by the U.S. investment bank.
(See related article).
Trackback(0)
 |
TrackBack URI for this entry
Subscribe to this comment's feed