Friday, July 4, 2008

Welcome to the dark world of global finance

What Really Killed Bear Stearns?

According to Mr. Burrough’s account, Bear did not have a liquidity problem, at least at first. In fact, he said it had more than $18 billion in cash to cover its trades when the week began. There were no major withdrawals until late in the week, after rumors flew that the company was in trouble. A top Bear executive told Mr. Burrough, “There was a reason [the rumor] was leaked, and the reason is simple: someone wanted us to go down, and go down hard.”

Posted by planning4acrash @ 07:19 AM (1168 views)
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16 thoughts on “Welcome to the dark world of global finance

  • Unless rumours get quashed quickly, they stick. B&B are struggling and I would imagine they will be either taken over or left to crash by the middle of next week. This is also happening to Taylor Wimpey and to a lesser extent Barratts. Someone will have a pop when they think the long term risk is worth the land bank.

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  • Another idiotic post.

    Please censor this comment, as you do all my comments p4ac.

    Your censorship is worse that any MSM.

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  • japanese uncle says:

    Smells like the staged run engineered by tricky Goldie, as usual.

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  • it_is_going_with_a_bang says:

    It’s always someone else’s fault isn’t it.

    Tha fact remains they ran a business that could be quashed by rumours in the first place. For that they do need to accept responsibility.

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  • george monsoon says:

    hang on, aren’t all banks run with a risk that rumours could cause a run.?

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  • cornishman says:

    Hi P4aC

    Nothing to do with this thread, but I’ve just read the stuff that you posted yesterday, after I went home, re education. Please don’t take this the wrong way, but your spelling is atrocious. Surprising, since you claim to have read so much. How will your future children learn to spell if you teach them yourself? It’s all very well pointing out the faults in any system – but if you have faults of your own, why would your proposed system actually be any better than the one you criticise?

    And how can a child know what it wants to learn if it is completely unaware of what it doesn’t know – the unknown unknowns?

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  • And your point is?

    I couldn’t care less about highly leveraged banks that leave themselves vulnerable to events.

    Here’s another long article that discusses Bear Stearns’ demise:

    http://www.vanityfair.com/politics/features/2008/08/bear_stearns200808

    This paragraph on the last page explains a lot:

    ‘Jimmy Cayne—whose 5.66 million shares, once worth nearly a billion, would now be worth less than $12 million—swore he would never accept such a humiliating offer. “The people around the table, some of them, their net worth was being wiped out,” says one person who was in the room. “There was every emotion you can think of: sadness, anger. They saw the tragedy. But the bottom line was, you know, when they got in a pickle, Bear Stearns didn’t have many friends.”’

    Boo hoo. We should be more worried about our lack of (genuinely) productive capacity and let the highly leveraged gamblers fail.

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  • With its formation the Bank of England soon flooded Britain with money. With no quality control and no insistence on value for money, prices doubled with money being thrown in every direction.

    One company was even offering to drain the Red Sea to find Egyptian gold lost when the sea closed in on their pursuit of Moses.

    By1698 the national debt expanded from £1,250,000 to £16,000,000 and up went the taxes the debt was secured on.

    As hard as it might be to believe, in times of economic upheaval, wealth is rarely destroyed and instead is often only transferred. And who benefits the most when money is scarce? You may have guessed. It’s those controlling what everyone else wants, the money changer’s.

    When the majority of people are suffering through economic depression, you can be sure that a minority of people are continuing to get rich.

    http://www.xat.org/xat/moneyhistory.html – – – different!

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  • whiteknight says:

    What a moron. They messed up, were a 0.001% as talented and good as they thought they were. And they deserve to be out of a job at the best.

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  • Safe As A Crash says:

    who cares? moving on… who’s next?

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  • I think a few people on here are being unreasonable regarding what Bear Sterns “deserved” and are showing a little ignorance with regards to what a run on a bank actually means.

    To those scoffing I ask you to imagine how long you would last if all your creditors asked for immediatiate payment (bills, credit cards, mortgage etc) and your debtors (salary for example) paid you at say not until the end of the year? I think even the most financially prudent people would suffer and possibly go bankrupt if this happened. That’s all a bank run is, and whilst it happens due to the perception of weakness, it doesn’t necessarily mean there is weakness there, only the perception of it.

    Whiteknight – this concept of glee that you have at Bear employees “Getting what they deserved” in my view shows ignorance with respect to who the main casualities in the Bear collapse turned out to be. Sure there are some high profile investors that lost millions BUT they still have millions – this hasn’t made them poor, just less rich. The reality is that there is a small army of people that dedicated 10-20 years service to Bear and had their savings and pensions in bear stock/options. These people weren’t rich, but they weren’t poor either. They are now. They have lost 15 years of their lives and any financial acknowledgement of it. These people are largely what we would call here in the UK the working middle classes – “normal people” if I can be so broad brush. Shame on you for rejoicing in their misfortune.

    I believe Bear was deliberatley sacrificed publically in an attempt by the industry with the authority’s blessing to draw a line under the credit crunch.

    Notice there is an SEC investigation into short selling of Bear stock before they went under and Goldmans name seems to be synonomous with it.

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  • cornishman, what has spelling got to do with anything? Get a grip and stop trying to score cheap points. The most intelligent person I ever met was profoundly dyslexic; so spelling is a measure of spelling and NOT intellectual ability.

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  • 9. harold said…
    cornishman, what has spelling got to do with anything?

    Agree with Cornish on this. P4ac was expounding the virtues of ‘his’ preferred style of education system, and bragging about his ability to read at an early age. If you choose to pontificate on your own education and literary ability then you might look a bit silly if what you have written is full of spelling mistakes (which are not just typing errors). Cornish was not talking about intellect or disability, but I agree the comment was off topic here, today.

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  • p. doff, in reality you agree with cornishman’s notion of the importance of spelling because you agree with his scepticism towards P4AC. That is, you are conflating the issue of spelling with politics and thus allowing your prejudice to cloud your judgement. I have absolutely no problem with rubbishing P4AC, or anyone else for that matter. However, if you do, make sure that your point is valid and not light weight (like spelling). Who knows, P4AC might be dyslexic. Are his views less valid simply because of this? Oh and BTW, hands up those who have never used spell-check. I rest my case.

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  • harold – you miss my point. As pdoff says, P4aC was making cheap jibes at the education system yesterday. I was merely pointing out a flaw in his proposal to educate his own children.

    We all make spelling mistakes from time to time – but he does make an extraordinary number. I was not being pedantic.

    And why do you think I’m showing scepticism towards P4aC? I find a lot of what he has to say interesting – if a little over the top at times. And I did point out that it was completely off topic myself – since it carried on a conversation from yesterday – and it was directed only to him.

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  • yawn…

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