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2008-09-15 Home Front Economy

Monday: Lehman Brothers Fails, Bank of America Buys Merrill Lynch

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Posted by Anonymoose 2008-09-15 00:00|| || Front Page|| [3 views ] Top

#1 USSA, USSA, USSA!

D *** NG IT, MORIARITY, MIL FORUM POSTERS > "COMMUNISM/TOTALITARIANISM IS DEMOCRACY AND VICE VERSIES"!

Posted by JosephMendiola 2008-09-15 01:25|| 2008-09-15 01:25|| Front Page Top

#2 Lehman files chapter 11. AIG asks for a loan to be paid bank with asset sales (which they have plenty of) leaving Mashington Mutual to be dealt with.

Good news is, with all the panic selling, and funds having to sell millions of shares to cover withdrawals, we're getting near the end of the bear.

Posted by Mike N. 2008-09-15 01:31|| 2008-09-15 01:31|| Front Page Top

#3 YOU ARE THERE, wid MTV HeadBangers Balls + QUEENSRYCHE > "SILENT LUCIDITY" [Search-And-Destroy-Armor]!

TWO DECADES-PLUS LATER AND THAT CHINESE GUY IN TIANENMEN SQUARE IS STILL STANDING IN FRONT OF MY PLA TANK - The World saw him on CNN from the rear; Myself, MADONNA, + TEXAS-SIZED ASTEROIDS saw him also from the front!

Posted by JosephMendiola 2008-09-15 01:33|| 2008-09-15 01:33|| Front Page Top

#4 And by the way, the DOW is a horribly constructed index. Its so bad they have to use that 'divisor' thing to make the numbers make sense after any stock splits etc.

Just venting.

Posted by Mike N. 2008-09-15 01:33|| 2008-09-15 01:33|| Front Page Top

#5 Mike, you're not venting, JOSEPHMENDIOLA is venting!

(It scares me but I kinda like to watch it, though. Is that wrong? ;) )

Posted by Swamp Blondie in the Cornfields 2008-09-15 01:41|| 2008-09-15 01:41|| Front Page Top

#6 This is a stock deal, not a cash deal (BoA will be increasing stock supply) so this will be bearish. There are some heavy put positions on Citi, they're the next one to watch. Hopefully, their stock will get hammered also, causing more withdrawals and selling.

Provided the fed can get a handle on inflation, we could see an end of the bear in early '09 as commodities stabilize, withdrawals fall off and investors move from their inflation hedges back into equities.

Up big is my forcast for 09.

Posted by Mike N. 2008-09-15 02:06|| 2008-09-15 02:06|| Front Page Top

#7 (It scares me but I kinda like to watch it, though. Is that wrong? ;) )

Joe or Lehman Brothers Swamp Blondie?

Swamp Blondie Ima real BAD too...

Cause I admit it, I enjoy watching the Big-Business Big-Shots when they are wearing Handcuffs and on the way to Prison!

The only problem as I see is that another 95% of the Corporate Thieves need to be doing HARD TIME also, like NO SUN LIGHT for 20-30 years.
[CLARIFICATION: NOT 95% of all Corporate officers just the thieving ones.]

But they don't even get Indicted let alone tried because of our Legal System..

BTW will someone explain why us little squeaks have to pay every CENT of our loans back to the Bank but these CEO CFO COO CVO CMO Bastards can loose Hundreds of Millions of someone elses Dollars and walk away with a pocket full of CASH, HOMES, JETS, and TROPHY WIVES?

Posted by Red Dawg ">Red Dawg 2008-09-15 02:39|| 2008-09-15 02:39|| Front Page Top

#8 The various stock markets in EU countries are tumbling today; down about 4-7% each as of this post.

Posted by mhw 2008-09-15 07:53|| 2008-09-15 07:53|| Front Page Top

#9 Up big in '09? Every smart President starts with or is bequeathed a recession to get it out of the way and be able to blame it on the predecessor. This builds the base for growth through the rest of the administration.

And have you looked at the number of mortgages yet to adjust past their teasers? And every day more of them are under water.

And this Lehman deal is part of a significant reorganization of Wall Street as Broker/Dealers are disintermediated out of the system.

And Europe is headed into recession also as they keep rates high to protect the Euro from the resurgent dollar.

And boomers, who have been rushing from bubble to bubble for the last 15 years to build their nest egg, will now begin withdrawing liquidity from the system as the seek to preserve capital, retire and start drawing down those nest eggs.

Finally, the policy of governments is to spread these crises out over time so that they aren't so violent but short as in the 19th century. That means this one is likely to last longer

The sky is not falling, but we'll be lucky to be up in '10.

Posted by Nimble Spemble 2008-09-15 08:05|| 2008-09-15 08:05|| Front Page Top

#10 Let's get the moonbats going, and say this is a Bush/Chaney design to suck the monies from the Obama empowerment fund done just before the election to hammer the ~~trust fund babies~~ poor and middle class from electing their ~~master~~ hero. :)
[It's got to be true, its on the net (well, now it is)]Heh.

Posted by Procopius2k 2008-09-15 08:11|| 2008-09-15 08:11|| Front Page Top

#11 Practically speaking, I would seriously recommend that everybody withdraw a couple thousand dollars at the bank today. Just have physical cash in your home for a week or two.

If there is no catastrophe, you're out only a few dollars in interest, tops. After two or three weeks, you just put it back in your account.

Posted by Anonymoose 2008-09-15 09:25|| 2008-09-15 09:25|| Front Page Top

#12 And Europe is headed into recession also as they keep rates high to protect the Euro from the resurgent dollar.

----------

is this a bug or a feature?

Posted by anonymous2u 2008-09-15 10:05|| 2008-09-15 10:05|| Front Page Top

#13 Anonymoose ... Are you saying that if someone has liquid funds available in a standard bank checking and/or savings account they will not be available for withdrawal if needed? Is this due to the physical printed cash shortage you referenced yesterday?

Posted by ExtremeModerate 2008-09-15 10:22|| 2008-09-15 10:22|| Front Page Top

#14 NS, I, you and everyone else are aware that mortgages will continue to default in larg amounts until spring of next year some time. That's why it's already priced in.

Secondly, recession and bear markets don't have to coincide and they don't if the recession is long feared and therefore priced in.

The unwinding of failing banks still has to work it's course and we still have to see about inflation, but the other two are long price in. That's the reasing why the housing sector is actually up since this summer.

Posted by Mike N. 2008-09-15 11:01|| 2008-09-15 11:01|| Front Page Top

#15 they will not be available for withdrawal if needed?

Some believe the bank runs are near. I have been following http://www.survivalblog.com/ for months now. They are not optimistic. Maybe some hyperbole on their part but I'll side with caution.

Posted by Zebulon Therenter4107 2008-09-15 11:03|| 2008-09-15 11:03|| Front Page Top

#16 If one bothered to ask people if they are planning on withdrawing a bunch of cash from their bank, only the paranoid ones would answer yes, so I suspect that's not enough to constitute 'a run'.

With all due respect to the underground shelters and soupcans crowd, you guys come out with this stuff all the time.

Posted by Mike N. 2008-09-15 11:13|| 2008-09-15 11:13|| Front Page Top

#17 This is what you get when a Congress tries to make all the people happy all the time. Allowing banks and mortgage companies to loan no down/no doc loans at ridiculous rates and short terms (ARMS) to people who can barely spell their name has consequences. As does having the smartest guys in the room (wall street, The Fed, SEC, Fannies and Freddies) forget their primary mission of "due diligence" and let Congress dictate how to handle inner city and depressed economic zones as veritable gold mines is a big reason. Plus outfits like Obama's ACORN have a lot to do with it by coercing banks and FI's into making community grants (bribes, extortion) in order to open up branches in their 'hoods. But of all the reasons there is the primal impulse of greed - by lender and borrower both.

Posted by Jack is Back!">Jack is Back! 2008-09-15 12:29|| 2008-09-15 12:29|| Front Page Top

#18 The problem is not that you don't have money, or that the banks don't have money. In a bizarre turn, it might mean that you literally cannot get your physical money from the bank to the retailer. No physical cash money at the bank to give you.

It is less an economic problem than an administrative problem.

Now, only about 5% of our money is backed by physical paper money. Both credit cards and cheques (Br. spelling for clarity), are credit instruments.

The US mints are currently printing paper money at 100% capacity. To increase production, temporary US mints will have to be put on military bases, if we can overcome the extreme shortages of the right kind of paper and ink.

Most small businesses and large corporations will immediately need high denomination bills, whose movement will be closely regulated by the government. Only the largest corporations will have credit "interfaith" among each other.

If suddenly, the credit card companies cancel their cards all at once, there will immediately be a huge number of cheque overdrafts, more than the banks can handle in their current condition. So only debit cards and automatic cheque withdrawl from the very few stores that offer it, who have the hardware to offer it, will be available.

Retailers will take common bank cheques for a short time, until they realize that a large percentage are overdrafts by people who have no credit cards. And unless they phone the bank to insure than the cheque is covered, they will have to refuse them. Again, except for the very few businesses who can automatically debit checking accounts electronically when they receive the cheque.

To make matters worse, just today, I read that one unnamed financial services organization is limiting its *debit* card purchases to $5000/day, because their corporate credit is under such strain.

All told, for weeks to months, there will be such incredible deflation that it will seem like nobody has any cash, even if they have hundreds of thousands of dollars in the bank.

How many people would you guess have even $100 in cash in their homes? $500?

Posted by Anonymoose 2008-09-15 13:22|| 2008-09-15 13:22|| Front Page Top

#19 I read the same shit about ten years ago before Y2K ended civilization as we know it.

Posted by Mike N. 2008-09-15 14:35|| 2008-09-15 14:35|| Front Page Top

#20 "If suddenly, the credit card companies cancel their cards all at once"
Why would they? That would be a sure ticket to bankruptcy.

Posted by Darrell 2008-09-15 15:13|| 2008-09-15 15:13|| Front Page Top

#21 Mike, you could be right about the market. I thought you were talking about the economy. One of my personal known unknowns is where the market will go.

Posted by Nimble Spemble 2008-09-15 15:27|| 2008-09-15 15:27|| Front Page Top

#22 BTW will someone explain why us little squeaks have to pay every CENT of our loans back to the Bank but these CEO CFO COO CVO CMO Bastards can loose Hundreds of Millions of someone elses Dollars and walk away with a pocket full of CASH, HOMES, JETS, and TROPHY WIVES?
They're pirates, we're not. 4 days to National Talk Like a Pirate Day.

Posted by Anguper Hupomosing9418 2008-09-15 15:57|| 2008-09-15 15:57|| Front Page Top

#23 Assuming what you say is true, 'moose (I'm not knowledgable enough to say one way or the other), would PayPal be affected? (Not the credit card part, the regular part.)

I wouldn't think so, since they have my "cash" sitting on their books and could transfer to or from bank accounts without needing physical money.

Posted by Barbara Skolaut">Barbara Skolaut 2008-09-15 16:02|| http://ariellestjohndesigns.com/]">[http://ariellestjohndesigns.com/] 2008-09-15 16:02|| Front Page Top

#24 This is a fake panic, We don't use cash for anything but small purchases (Well, $100 and less.) and hve no real cash supply on hand.

My Mom (Who's losing it) had her bank change hands to BBC Centura.

Not wanting her money in "A foreign bank" went down to remove HER money. so she went in and wanted to cash out a CD, of one hundred grand( No I'm not joking) the bank didn't have the cash, (Of course) and she finaly had to settle for ten thousand in cash and a Cashier's check for the rest.

She was highly indignant "Think, a Bank that doesn't have enough cash to cover deposits" (Etc)

Posted by Redneck Jim">Redneck Jim 2008-09-15 18:11|| 2008-09-15 18:11|| Front Page Top

#25 "Think, a Bank that doesn't have enough cash to cover deposits"

Of course the it doesn't: the money is loaned, how doesn she think the Bank can give her an interest.

Posted by JFM">JFM 2008-09-15 18:27|| 2008-09-15 18:27|| Front Page Top

#26 JFM, of course the bank loans it out, I mentioned Mom's loosing it, she really expected to walk out with a hundred grand cash Even brought my brother with her to "Talk some sense into the manager, Bro's a huge Biker type guy, friendly and easygoing, but quite fearsome to look at, he's the one wwho tried to explain to Mom that they wee'nt going to give her a hundred grand cash, and if they did , he and she couldn't carry it, they'd have to hire an armored truck (Bit of exaggeration, but it got through)

Posted by Redneck Jim">Redneck Jim 2008-09-15 22:23|| 2008-09-15 22:23|| Front Page Top

#27 CNN > 'tis the first crisis/problem for the winner of 2008 POTUS Elex???

Posted by JosephMendiola 2008-09-15 22:30|| 2008-09-15 22:30|| Front Page Top

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