Bear Is Toast!!!!!!!!

[Rajiv]

Re: Bear Is Toast!!!!!!!!

carlyle capital was 2 days ago.

The problem with Carlyle Capital and all of the current credit crisis is succinctly stated in the Washington Post article Carlyle Capital Shares Fall as Trading Resumes

Carlyle Capital is incorporated on Guernsey, an island in the English Channel, and is traded on Amsterdam's Euronext exchange. The company was set up in August 2006 with roughly $670 million in cash from Carlyle's owners and other investors, and about $300 million in additional capital raised from the public sale of stock.

The capital allowed the company to go to banks and borrow far more, leveraging its cash investment some 20 times into the portfolio valued recently at $21.7 billion.

Though focused on AAA-rated mortgage-backed securities issued by Fannie Mae and Freddie Mac -- traditionally considered secure and conservative investments -- the company's prospects have been dimmed by the same doubts that have upended securities linked to riskier subprime mortgages, namely whether the underlying assets were losing value and whether the homeowners would continue to make their payments.

Everybody talks of the assets and the valuation of assets -- but nobody points a finger at the degree of leveraging involved -- higher the leverage, more the damage and the pain.

All the models of leveraged investing that I have seen are micro models -- that are only good in small scale investing -- and nobody has ever assessed the impact of the widespread use of leveraged instruments on the economy - particularly if the payment chains hiccup.

[jk]

Re: Bear Is Toast!!!!!!!!

The problem with Carlyle Capital and all of the current credit crisis is succinctly stated in the Washington Post article Carlyle Capital Shares Fall as Trading Resumes



Everybody talks of the assets and the valuation of assets -- but nobody points a finger at the degree of leveraging involved -- higher the leverage, more the damage and the pain.

All the models of leveraged investing that I have seen are micro models -- that are only good in small scale investing -- and nobody has ever assessed the impact of the widespread use of leveraged instruments on the economy - particularly if the payment chains hiccup.

can't find out how big the fed's loan is:

The senior staffers declined to describe how large the loan to Bear Stearns was..

but i doubt it measures up to bear's $13.4Trillion in derivatives counterparty exposure.

[GRG55]

Re: Bear Is Toast!!!!!!!!

carlyle capital was 2 days ago. bear stearns today. any nominations for the next big blow-up?

What? You don't believe S&P's much repeated call that "The End is In Sight"??

It may be "in sight" but it's looking uglier by the hour... :eek:

[GRG55]

Re: Bear Is Toast!!!!!!!!

Holy SHIT! (sorry Eric,but)
http://www.bloomberg.com/apps/news?p...tOI&refer=home
Mike

LOL. I seem to recall reading that Cayne was playing golf and bridge as Bear's two hedge funds blew up last year. Apparently there's nothing to worry about when you know the Federal cavalry will ride to the rescue...

Bear Stearn's Cayne Was Playing Bridge in Detroit, WSJ Says

By Nicholas Larkin

March 15 (Bloomberg) -- Bear Stearns Cos. Chairman James ``Jimmy'' Cayne was playing in the North American Bridge Championship in Detroit over the past two days, the Wall Street Journal reported.

Cayne and a partner were placed fourth in a pair's event on March 13, the newspaper reported yesterday, citing the American Contract Bridge League's Web site.

The event took place while Bear Stearns Chief Executive Officer Alan Schwartz held a series of conference calls with company directors to discuss a cash pledge from the Federal Reserve and JPMorgan Chase & Co., the Journal said, citing unnamed ``insiders'' and people familiar with the matter. Cayne participated in at least some of the discussions, the newspaper said.

Cayne was playing the game yesterday as the investment bank's shares plunged, according to an unnamed attendee, the Journal reported, adding that Cayne declined a request to comment.

http://www.bloomberg.com/apps/news?p...efer=worldwide

[touchring]

Re: Bear Is Toast!!!!!!!!

How does one calculate losses in derivatives? Does $13.4 T exposure means $13.4 T losses? Or is it a percentage, like 1%, which translates into $134 billion. :confused:

can't find out how big the fed's loan is:

but i doubt it measures up to bear's $13.4Trillion in derivatives counterparty exposure.

[jk]

Re: Bear Is Toast!!!!!!!!

How does one calculate losses in derivatives? Does $13.4 T exposure means $13.4 T losses? Or is it a percentage, like 1%, which translates into $134 billion. :confused:

there's no single answer. it depends on the specifics of the contracts and the movements in underlying assets from which the derivatives derive their pricing. the number $13.4T is a measure of total exposure.

[johngaltfla]

Re: Bear Is Toast!!!!!!!!

There is a lot more happening behind the scenes than many would prefer to discuss. The "Deflationists" who have no idea just what this Central Bank is capable of continue to argue that a market crash and continued primary dealer failures will confirm their point of view as securities and the garbage paper is marked down.

Just remember 1914 and what the Fed along with the Treasury can do.

A "time out" would kill the world markets and crater the dollar. It would also give the banksters enough time to reset the financial house back in order by expanding the money supply to a point of absurdity which will allow the current system to continue "functioning" in some capacity.

The little guy is going to get screwed severely. Just my .02 worth.....

[touchring]

Re: Bear Is Toast!!!!!!!!

there's no single answer. it depends on the specifics of the contracts and the movements in underlying assets from which the derivatives derive their pricing. the number $13.4T is a measure of total exposure.

Thanks.

There is a lot more happening behind the scenes than many would prefer to discuss. The "Deflationists" who have no idea just what this Central Bank is capable of continue to argue that a market crash and continued primary dealer failures will confirm their point of view as securities and the garbage paper is marked down.

Just remember 1914 and what the Fed along with the Treasury can do.

A "time out" would kill the world markets and crater the dollar. It would also give the banksters enough time to reset the financial house back in order by expanding the money supply to a point of absurdity which will allow the current system to continue "functioning" in some capacity.

The little guy is going to get screwed severely. Just my .02 worth.....

How does the little guy get screwed if there's no deflation? By inflation? How about the little guys with money all converted into gold?

[Guest]

Re: Bear Is Toast!!!!!!!!

Touchring -

Chris Laird of Prudent Squirrel agrees wth you -

1) Big market crash? = YES (soon)

2) Resulting currency "deflation"? = NO

3) Crash leading to - out of control currency abuse = YES

4) GOLD and PM's still a buy? = YES

"Deflation" - by it's strict definition of a consequently appreciating senior currency - remains nonsensical to this scenario.

Economic advisors counseling one's positioning away from inflation hedges in anticipation of a global market crash - One should fire them. Wrong call.

___________

Christopher Laird - confirming the inevitability of the broad stock market getting massively repriced (i.e. crash), with implications to inflationary hedges.

If we were to say that gold has risen by roughly 50% in USD in the last year, it might be said otherwise that the gold market’s opinion of the USD has fallen by that percent, ie there is now 50% less confidence in the USD, so gold’s USD price rose that much. Now, this may sound obvious, but this ‘counterweight to currency’ is the way people need to look at gold. I don’t prefer to use the ‘investment’ concept to look at gold. I like to use the valuation aspect of it – ie its verdict on currency value.

This time, gold is clearly giving a verdict that Central Banks are failing to reflate a massive world deleveraging, that markets are going to unwind no matter what the CBs attempt to do. If central banks fail to reflate credit and financial markets, then the only alternative for world governments is big deficits. More programs to bail out banks, more central bank $trillions to try to stem the losses. Effectively, more debasement of world currencies.

The investing and speculation aspects of the gold market are not the primary driver of the gold price right now. This would explain why gold has not corrected much since August, but rather has relentlessly risen. There are a lot of profits in gold right now, but gold has not corrected significantly for a long time now. It is rising due to currency devaluation expectations as central banks fight the relentless credit and market deleveraging.

They are failing, thus more expectations of central banks using their currencies to fight the deleveraging going forward. So, the gold price continues to rise and keep its gains. Why are lower interest rates failing to restart things? Because, this time, unlike 2001, people cannot borrow any more. They have already borrowed all they can. This time, cutting interest rates will not work to revive economies.

The only other option is government spending, and or using currencies to stimulate things. Using currencies to keep things going will fail because the deleveraging worldwide is way too vast. Why are the bond markets freezing, and such? Because lenders of all types, who bought all the securitized debt, now realize that the present levels of debt in every sector, public and private, cannot be kept up. So, then, why do new lending? Everybody is maxed out. The reason for the collapse of the credit markets is also that simple.

When enough big investors realize there will be no economic recovery from cutting interest rates this time, the stock markets will finally collapse big. I expect this to happen sometime this year, election or no election. The problems are just too big.
_____________

Christopher Laird - Prudent Squirrel

http://www.gold-eagle.com/editorials...ird031408.html

[metalman]

Re: Bear Is Toast!!!!!!!!

Touchring -

Chris Laird of Prudent Squirrel agrees wth you -

1) Big market crash? = YES (soon)

2) Resulting currency "deflation"? = NO

3) Crash leading to - out of control currency abuse = YES

4) GOLD and PM's still a buy? = YES

"Deflation" - by it's strict definition of a consequently appreciating senior currency - remains nonsensical to this scenario.

Economic advisors counseling one's positioning away from inflation hedges in anticipation of a global market crash - One should fire them. Wrong call.

___________

Christopher Laird - confirming the inevitability of the broad stock market getting massively repriced (i.e. crash), with implications to inflationary hedges.

If we were to say that gold has risen by roughly 50% in USD in the last year, it might be said otherwise that the gold market’s opinion of the USD has fallen by that percent, ie there is now 50% less confidence in the USD, so gold’s USD price rose that much. Now, this may sound obvious, but this ‘counterweight to currency’ is the way people need to look at gold. I don’t prefer to use the ‘investment’ concept to look at gold. I like to use the valuation aspect of it – ie its verdict on currency value.

This time, gold is clearly giving a verdict that Central Banks are failing to reflate a massive world deleveraging, that markets are going to unwind no matter what the CBs attempt to do. If central banks fail to reflate credit and financial markets, then the only alternative for world governments is big deficits. More programs to bail out banks, more central bank $trillions to try to stem the losses. Effectively, more debasement of world currencies.

The investing and speculation aspects of the gold market are not the primary driver of the gold price right now. This would explain why gold has not corrected much since August, but rather has relentlessly risen. There are a lot of profits in gold right now, but gold has not corrected significantly for a long time now. It is rising due to currency devaluation expectations as central banks fight the relentless credit and market deleveraging.

They are failing, thus more expectations of central banks using their currencies to fight the deleveraging going forward. So, the gold price continues to rise and keep its gains. Why are lower interest rates failing to restart things? Because, this time, unlike 2001, people cannot borrow any more. They have already borrowed all they can. This time, cutting interest rates will not work to revive economies.

The only other option is government spending, and or using currencies to stimulate things. Using currencies to keep things going will fail because the deleveraging worldwide is way too vast. Why are the bond markets freezing, and such? Because lenders of all types, who bought all the securitized debt, now realize that the present levels of debt in every sector, public and private, cannot be kept up. So, then, why do new lending? Everybody is maxed out. The reason for the collapse of the credit markets is also that simple.

When enough big investors realize there will be no economic recovery from cutting interest rates this time, the stock markets will finally collapse big. I expect this to happen sometime this year, election or no election. The problems are just too big.
_____________

Christopher Laird - Prudent Squirrel

http://www.gold-eagle.com/editorials...ird031408.html

mish and ackerman... you're fired! :mad::mad::mad: :rolleyes:

[GRG55]

Bear Is Gone...

Crossing the newswires right now before the opening of the Asia session, J.P. Morgan to acquire Bear Stearns - for $2.00 a share in JPM stock.

BSC closed down 47% at $30 on Friday. That's one hell of a two day haircut. :eek:

[Jim Nickerson]

Re: Bear Is Gone...

Crossing the newswires right now before the opening of the Asia session, J.P. Morgan to acquire Bear Stearns - for $2.00 a share in JPM stock.

BSC closed down 47% at $30 on Friday. That's one hell of a two day haircut. :eek:

52 week high for BSC was 159. So down to 2 bonars actually qualifies as more than a haircut, actually it is more like a craniectomy, you know like in the Hanibal Lecter scene.

JPMorgan Closes Deal on Bear Stearns
Sunday March 16, 7:18 pm ET
By Joe Bel Bruno and Madlen Read, AP Business Writers

JPMorgan Chase Says It Will Acquire Rival Bear Stearns for $2 a Share

NEW YORK (AP) -- JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.

JPMorgan Chase & Co. said the $2 a share, all-stock deal has received the required approvals from the federal government and the Federal Reserve. Bear Stearns shares close Friday at $30 a share.

The Fed will provide special financing to JPMorgan Chase in connection with the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

http://biz.yahoo.com/ap/080316/jpmor...r_stearns.html

[goldisliberty]

Re: Bear Is Toast!!!!!!!!

CNBC-world, Amanda Drury just reported: "Bear Stearns to be bought by JPMorgan-Chase for $2/share."

Yes, two US dollars per share!

AND

Fed announces 25 bps cut of discount rate immediately, tonight, Sunday.

The Toast is gone.

[Jim Nickerson]

Re: Bear Is Toast!!!!!!!!

http://www.bloomberg.com/apps/news?p...EW0&refer=home

Fed Cuts Discount Rate, Says Dealers May Borrow (Update1)

By Scott Lanman

March 16 (Bloomberg) -- The Federal Reserve reduced the rate on direct loans to commercial banks by a quarter-point and said it will allow primary dealers to borrow at the rate in exchange for a ``broad range'' of investment-grade collateral.

The central bank, in a statement today in Washington, also extended the maximum term of discount-window loans to 90 days from 30 days. The Fed approved the financing arrangement announced by JPMorgan Chase & Co. and Bear Stearns Cos. JPMorgan separately agreed to buy Bear Stearns for about $2 a share.

Fed Chairman Ben S. Bernanke is stepping up efforts to keep strains in financial markets from spiraling into a full-blown meltdown. Last week the central bank agreed to emergency loans to a non-bank, Bear Stearns, for the first time since the 1960s. Fed officials also announced a program to swap $200 billion in Treasuries for debt including mortgage-backed securities.

[goldisliberty]

Re: Bear Is Toast!!!!!!!!

The Bear was not alone. It was among rather "distinguished" company
(From LeMetropoleCafe, GoldFish advised members on 03/11/08 the following firms are wrestling with insolvency:

"Thornberg Mortgage , New Century Financial Corp.
Ambac Financial Group , Citibank Fannie Mae, Freddie mac gone: Bear Sterns - bought for $2/share W
J.P. Morgan Chase & Company
Bank of America
Carlyle Capital Corp " [end quote]

Still want to own paper?

Joe Lewis owned BSC @ $107.00, he just lost $105/share. Down 1.2 billion plus in a flash.

WHO IS NEXT TO GO?

Yes, the BEAR was eaten by the Street, perhaps for not having participated in the 1998 LTCM bailout. The elites have very long memories...and very sharp knives.

You know what stops a very sharp knife metaphorically, of course you do:

GOLD & SILVER. HELD IN YOUR TREMBLING HANDS.

1) A "bank run" among the elites can occur in 24-48 hours without any little investors knowing until it is too late for one to liquidate one’s exposure; We won't see any sheeple lined up outside a street-level bank like Northern Rock (although that will also come to pass) and,

2) Every firm is now suspect. This is key: suspicion has replaced confidence. Retail banks no longer trust investment banks; investments banks no longer trust one another.

If everyone is suspect, perception becomes reality and a self-fulfilling prophecy results: catastrophe results from a debt-based system’s loss of faith by both the masses and the elites. The only solution for those on the “inside,” is to try to restore confidence by massive cash infusions. Alas, more suspect cash leads only, eventually, to larger suspicion and loss of faith. The timetable is however long it takes for monetary inflation to flow through to price inflation; used to be eighteen months, feels a helluva lot shorter now. Say six to twelve months, maybe even less.

What can take the place of trash, sorry, I mean cash’s place? Gold and Silver

James Turk: "Gold is the ultimate catastrophe hedge.” 1st hr fsn this wknd

Northern Rock, Countrywide, Carlyle's subsidiary, Soc-Gen, BNP Paribas, Merrill Lynch, Citi, Lehman Bros. are reasons enough to consider what we are living through a true "catastrophe." And, yet, they are only the ones about which we have learned since the summer of 2007.

Just keep repeating, BSC at $2.00/share.

Just keep buying physical PMs.

You'll be fine.