Double WOW!

[dvcgirl]

OK, it seems that Bear Stearns is one of the big players in the repo and derivatives markets and had the Fed not arranged this "buyout" the entire market was in danger of collapsing.

That's right. And things could still spiral down.

Another interesting note....Bear Stearns was founded in 1923 and survived the Great Depression.

Gonna be tough to find any way to put a positive spin on the events of today.

 

[Disneycrazymom]

This is very serious. What action would be the most wise one for the "average" person? Do we wait it out? Would it be wise to pull some (I am in NO WAY suggesting all) money out of the bank for an emergency cash fund? Just thinking about it as we ran through our cash this weekend! That is a whole 'nother budget thread!

 

[corndog]

All this because of the arrogant and short-sighted run-up of rates by the Fed.

At least they've begun to unravel some of the damage they've done. Though much of it will be irreparable. What a shame.

 

[dvcgirl]

All this because of the arrogant and short-sighted run-up of rates by the Fed.

At least they've begun to unravel some of the damage they've done. Though much of it will be irreparable. What a shame.

No, it couldn't be that the Fed *lowered* the rate all the way down to 1.0% pumping the economy up with easy credit for all with practically zero regulation. No, that probably doesn't have anything to do with what's happening.

They'll probably go another full point on Tuesday. Can't wait til inflation gets into the double digits and then we can watch as they have emergency meetings to *raise* rates.

 

[punkin]

They'll probably go another full point on Tuesday. Can't wait til inflation gets into the double digits and then we can watch as they have emergency meetings to *raise* rates.

Inflation is not the bogeyman right now. The Fed is trying to stave off the complete collapse of the US financial markets. They will do whatever they can to prop them up and inflation be damned.

 

[corndog]

No, it couldn't be that the Fed *lowered* the rate all the way down to 1.0% pumping the economy up with easy credit for all with practically zero regulation. No, that probably doesn't have anything to do with what's happening.

They'll probably go another full point on Tuesday. Can't wait til inflation gets into the double digits and then we can watch as they have emergency meetings to *raise* rates.

Inflation ceased to be a concern when people quit keeping their money in mattresses or in a can buried out back.

 

[punkin]

All this because of the arrogant and short-sighted run-up of rates by the Fed.

At least they've begun to unravel some of the damage they've done. Though much of it will be irreparable. What a shame.

Inflation ceased to be a concern when people quit keeping their money in mattresses or in a can buried out back.

You have got to be kidding.

 

[dvcgirl]

Inflation is not the bogeyman right now. The Fed is trying to stave off the complete collapse of the US financial markets. They will do whatever they can to prop them up and inflation be damned.

Oh, I know inflation is the *last* thing that the Fed and Treasury are worried about on this fine evening. They're worried about bank runs and markets crashing. However, the remedies that will be put forth will unleash some nasty side-effects for all of us down the road.

Make no mistake about it though....no sooner will they get rates down to the bitter bottom when they'll be forced to start raising them....not because the economy is overheating, but because inflation will be out of control.

 

[callaghan0416]

Things are not good. The Fed did this to help stabalize the markets and we can see that they are not reacting well. Everyone is waiting for the other shoe to drop or the next bank run. Bear Sterns trading floor is not trading tomorrow.

So, who shorted Bear Sterns on Friday???????

callie

 

[punkin]

Things are not good. The Fed did this to help stabalize the markets and we can see that they are not reacting well. Everyone is waiting for the other shoe to drop or the next bank run. Bear Sterns trading floor is not trading tomorrow.

So, who shorted Bear Sterns on Friday???????

callie

Where did you hear that they stopped trading?

 

[callaghan0416]

From a trader at Bear, they just got the call.

callie

 

[punkin]

Equities or bonds? Oh ****!!!

 

[callaghan0416]

Don't have all the details, traders are very skittish... wonder why?



callie

 

[newtodcl]

The facts?

Between the end of November 2006 and the end of March this year, former Bear Stearns boss -- and current executive committee chairman -- Greenberg sold 179,277 shares at an average price of about $161, raising a total of $28.8 million.

Today the value of those shares has collapsed by $7.7 million to just $21.1 million.

After deducting his stock option costs, Greenberg made $17.7 million in profits before tax. Had he waited till now to sell the shares, he would have made just $10 million.

Nice work if you can get it, as they say.

Greenberg was not alone. Between December last year and the end of March, the now-ousted co-president Warren Spector dumped 116,255 shares at an average price of $164, raising a total of $19.1 million.

The value of those shares today: just $13.7 million.

After option expenses, Spector made $16.4 million. That's $5.4 million more than he would have made if he had waited.

Last December chairman and CEO James Cayne cashed out 46,415 shares at around $165, raising $7.6 million

Value today? Two million dollars less.

And Samuel Molinaro, the chief financial officer who just got promoted to chief operating officer thanks to the company's financial crisis, saved himself more than $400,000 by selling shares last December for $1.5 million instead of waiting until now.

It is, perhaps, a shame that Bear Stearns' two disastrous hedge funds didn't prove as nimble and astute in their trading as the guys at the top. Instead, they were caught holding junk mortgage paper as default rates soared.

Stock sales weren't the only way top executives at Bear Stearns pocketed a fortune even as they sailed the Titanic straight at the iceberg. Company filings reveal that Bear Stearns also awarded a staggering $140 million in bonuses to top executives last year.

And by good fortune, just over half of those bonuses were paid in cash rather than in the company's fast-shrinking shares.

 

[crusoe2]

I'm not at all knowledgable about the stock market so I'm hoping that one of you could fill me in. What is the significance of Bear Stearns not being traded tomorrow? Sorry if that's a really dumb question but I gathered from punkin's reaction that it is really bad news. I am also wondering the same thing as the previous poster who asked what all of us average folks should do to protect ourselves right now. We don't have any investments except DH's 401k. He just changed jobs and, since it only has (or had? ) about $8000 in it, we were going to cash it out and use the money to pay off a credit card that is eating us up in interest. Btw, thanks to those of you who post about and explain this stuff. I've learned quite a bit by reading your posts.

 

[Frankiesmom]

All of this makes me so nervous; it makes me want to pull all our $ out of the bank! I hope that the market can hold on; as we do have some money- not alot- but enough that all of this will definetly have me watching tv pretty much all day tomorrow.

 

[Disneycrazymom]

Anyone know why the news isn't talking about this?

 

[neatokimmo]

Hmmm, will be interesting to see how much this crashes other stocks. I unfortunately have a margin account right now that I am going to pay off with a HELOC so I won't be paying as much interest. Since the HELOC is a 15 year one, I guess I don't need to worry about the bulk of my retirement account until 2023

 

[aloha_lilo]

Anyone know why the news isn't talking about this?

It looks like the major cable news outlets are running repeats...either there isn't anyone at the news stations to run the story (I kinda get the impression that they operate on a skeleton crew at night to save money due to the repeats) or they are waiting till tomorrow to make an even bigger production of it.

I am so scared right now...

 

[Frankiesmom]

Good luck tomorrow everyone! I fear we're going to need it. And I really think I'll be removing all our $ from the bank- I'm just going to leave enough to cover my written checks and I'm going to take the rest.