Hold on to your britches

Discussion in 'Financial Cents' started by melbo, Mar 16, 2008.


  1. melbo

    melbo Hunter Gatherer Administrator Founding Member

    I hope like hell you have no large cash in a 401K.

    Bear Stearns was just bought by JP morgan for $2 a share. Bear Stearns was set yo go bankrupt on Monday if they didn't find a buyer. That was a $100 stock at one time and $39 last week. Fed assisted in the bailout, er, buyout.

    Lehman bros is ready to fall over on it's side too.

    A bank run by any other name is still a bank run... that's what is happening to these banks right now. Big money is leaving fast, steady and quiet. Gold is already up $22 tonight. Tomorrow is going to be a pretty bad day on the Street.

    If you have your teeth with you, better put them in. [lolol]
     
  2. melbo

    melbo Hunter Gatherer Administrator Founding Member

    What happened this week could be the start of something bad. As the Fed -- using JPMorgan Chase & Co. (NYSE: JPM) as its conduit -- bailed out The Bear Stearns Companies (NYSE: BSC), I was watching which banks were falling the most in sympathy. Next on the list? Lehman Brothers Holdings Inc. (NYSE: LEH) whose shares lost 14.6% yesterday -- a huge drop but nothing compared to Bear Stearns's 47% decline.

    What exactly is going on here? The Wall Street banks hold the cash and securities of corporations, hedge funds and other investors. If a Wall Street bank files for bankruptcy, the bankruptcy process freezes those assets so that the customers can't get access to them. Thanks to bankruptcy law, the courts get to decide which creditors will get their hands on those assets. The reason Bear Stearns failed is that its customers withdrew their funds so they would not be frozen by bankruptcy.

    The Fed stepped in because -- as I suggested Thursday -- it was faced with a choice of the lesser of two evils. It chose to create a "moral hazard" by bailing out Bear Stearns over letting it fail because it thought the cost of moral hazard was less than the cost of wiping out Bear Stearns shareholders and customers and all the collateral damage (pun intended) that would ensue. So why is Lehman Brothers the next one at risk?

    Well, Lehman Brothers shares fell 14.6% on Friday. And according to Reuters, it holds "extensive mortgage assets, and one credit derivatives dealer, speaking on condition of anonymity, said his bank was pulling back on its exposure to Lehman, as were his clients. Rumors of funds unwinding positions with Lehman abounded, with everybody from risk management consultants to hedge fund managers to traders having heard them."
     
  3. melbo

    melbo Hunter Gatherer Administrator Founding Member

    oops, gold up $30
     
  4. melbo

    melbo Hunter Gatherer Administrator Founding Member

    USD at 71.04
    ru roh
     
  5. Tango3

    Tango3 Aimless wanderer

    That"sux" we don't have "alot" in 401k's but I was hoping to let them sit for 20 years or so.
     
  6. Minuteman

    Minuteman Chaplain Moderator Founding Member

    I cashed out mine and sold of all my stocks two years ago. I don't trust "assets" that I cant touch. All of my assets are in my garage, storeroom and gun safe now.
     
  7. hacon1

    hacon1 Monkey+++

    This is getting uglier by the minute!!! It's like that really bad car crash that you just don't want to see but can't help but look at. By morning, this could be out of control!
     
  8. RouteClearance

    RouteClearance Monkey+++ Site Supporter

    USD has dropped almost 1 full point since 7:00pm. This is not good.
     
  9. ColtCarbine

    ColtCarbine Monkey+++ Founding Member

    Got out of 401K plans when our fund was robbed for millions by Capital Investment in the late 90's
     
  10. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    whats a 401 k?
    hehehe
    i havea 401 they cant touch .....Rat holed....[beer]
     
  11. S&P

    S&P E&E w/AR

    You guys are downplaying this, it's much worse than that! Seriously though, I can't remember seeing so many negative factors heading into a Monday market open.

    The Fed discount rate cut, BSC "buyout", Euro @ $1.58, Yen @ 96, oil @ $111, gold @ $1027, S&P futures down 2% to 1266 currently, Tokyo market (Nikkei) down 4%. This should be a day to remember in the market, I'll be shorting the living daylights out of some financial stocks.

    As for the 401ks; hopefully you guys made appropriate changes to your portfolios back at the beginning of the year if not earlier. Selling now is too late, may as well ride it out and wait for the market to come back to you, unless of course you think that the time is now upon us that we have been prepping for. We are definitely closer to that point than we have been in quite some time.
     
  12. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Lots of rumours flying around too...
    Bank Runs...
    Feds already at banks...
    Sudden mandatory before the bell meetings for the traders in the pits....
    Saturday meetings at banks etc...
    Sunday meetings at banks etc...
    Bank Holidays...
    Markets tanking....
    Dollar failing....
    More failures....

    Leading to Panic....
    http://www.merriam-webster.com/dictionary




    <DT class=hwrd>Main Entry: <DD class=hwrd><SUP>2</SUP>panic <DT class=func>Function: <DD class=func>noun <DT class=date>Date: <DD class=date>1708 1 a: a sudden overpowering fright; also : acute extreme anxiety b: a sudden unreasoning terror often accompanied by mass flight <WIDESPREAD panic in the streets> c: a sudden widespread fright concerning financial affairs that results in a depression of values caused by extreme measures for protection of property (as securities)2slang : one that is very funny synonyms see fear

    Markets and Money are all about emotions... the euphoria of greed that breeds the power that comes from wealth....[booze]

    I think "sudden widespread fright" hasn't even yet begun... but wait... it is coming.... unfortunately... sooner than I had hoped....[coffee2]

    Here's an interesting graphic... I bet there are alot of emotions generated by this one for the holders of this stock and the company's workers and all those folks tied to this company's well being ( I don't care about the high paid / powered execs)....[boozingbuddies]Lots of wealth, power, hopes and dreams got wiped out this weekend with this graphic...


    </DD>
    2000121443269174672_rs.
     
  13. melbo

    melbo Hunter Gatherer Administrator Founding Member

    Where is that 'we are screwed' image with guys head in his ass? I'm nervous that my wife and 2 daughters are still 1200 miles away. I did hand a few K in cash for the trip and she managed to pull some more from an ever increasing resistance to customers that withdrawl cash.

    guys and gals... this is it. We are just over the edge of the cliff and have a few last seconds to do something about it. I remember getting a message about "WTF a financial forum?" a long time ago.

    Remember to stock some snacks for hungry children.
     
  14. NWPilgrim

    NWPilgrim Monkey++

    Come on guys, there's gotta be a silver plated zinc lining to this somewhere right? Dang, that took too long to type...I mean there must be a zinc plated steel lining to this, right?

    It is weird that I have not heard such news since the Carter years, yet life around me pretty much goes on as if nothing is happening. With carter we called it stagflation and it seems we are in for round two of something similar.
     
  15. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    No doubt... things need to correct... and I'm still hopeful that this "controlled burn" that the Fed is trying so hard to execute will succeed....
    Best case... lots of wealth and power lost.... belts tighten... excess is contained... ease into a correction... no sudden crashes.... no civil disorder.... no war or terrorism... it could happen.....
    I'm really really really hoping for that scenario....[beer]
     
  16. melbo

    melbo Hunter Gatherer Administrator Founding Member

    You sound like a REALTOR, Bear
    Or a Title attorney.
    bah, we are going to crash. I'll just say it.
     
  17. Tango3

    Tango3 Aimless wanderer

    asian and european mkts are down single digits(3-5%)cnbc has been running video of "traders" carrying their boxes of personal stuff out to waiting taxi cabs...I've heard the word "run" more than once this a.m.
    Ding-ding -ding(opening bell) here we go.
     
  18. sheen_estevez

    sheen_estevez Monkey+++

    Had on the Clinton News Network this morning talking about this, didn't want to get out of bed, better run an inventory of my supplies this week
     
  19. ColtCarbine

    ColtCarbine Monkey+++ Founding Member

    I guess we'll see what happens today, interesting to say the least that newscasters are talking about a failing economy in the US, dollar falling in value.
     
  20. BAT1

    BAT1 Cowboys know no fear

    I think we are going to set a record for hyper inflation. We've set every other record so far. Alot of people are going to soil their britches before this is done. I had a dream of them jumping out of sky scraper windows last night. Please brace for impact.
     
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