Bear Stearns Bought for $2 a Share !

[Oldmoparguy1]

Originally Posted By: Gary Allan
Where's that whistling gremlin when I need him?

Sorry, this is way too ..hmmm..too much dark comedy

 

[Turk]

...but, but, but if we sell our investments and go to cash, the FDIC only covers up to $100,000. So we're scrued that way too, right?

Mattress, knife, ready...!

 

[1sttruck]

" the FDIC only covers up to $100,000"

Per account, so you can open as many accounts as needed. Retirement accounts are insured for $250k as I recall.

A bit of hubris for Bear Stearns as they declined to help out with the bailout of LTCM, saying they'd never spend a nickel on it.

Other smaller meltdowns in the recent past are Enron, who took Arthur Anderson with it. Another case of listening to the pundits babble on about free markets and energy trading geniuses, but it was all just corruption and fraud growing the wake of receeding regulation.

 

[Pablo]

These are not examples of "free market" failures. The only thing I see is the typical "failure" of some weird hybrid microeconomic model. In fact, like it or not some economic models only work in the purest of forms. Government didn't help here………..

 

[Steve S]

Originally Posted By: 1sttruck
" the FDIC only covers up to $100,000"

Per account, so you can open as many accounts as needed. Retirement accounts are insured for $250k as I recall.

A bit of hubris for Bear Stearns as they declined to help out with the bailout of LTCM, saying they'd never spend a nickel on it.

Other smaller meltdowns in the recent past are Enron, who took Arthur Anderson with it. Another case of listening to the pundits babble on about free markets and energy trading geniuses, but it was all just corruption and fraud growing the wake of receeding regulation.
Are you sure about that? I have never felt positive on that claim . I do not know why though.

 

[Steve S]

Originally Posted By: tpitcher
...but I shouldn't sell mutual funds when the market is this low, correct?
Buy low sell high.

 

[Pablo]

I thought you could have different accounts each with up to 100,000 - but they had to each have different benificaries to be be FDIC insured.

 

[Steve S]

Originally Posted By: mechtech2
A day and a half earlier, the B+S execs said it would never go below $80/ share. B+S shoud be [censored].
The execs pay???Should they return their salary for poor performance on the job?

 

[javacontour]

I don't think the FDIC makes any claim on how fast they will pay a claim. So you may be insured, but I'm not confident there is a requirement to pay you today if you have a claim.

Can anyone confirm this?

 

[Brett Miller]

How about the Bear Sterns investor that lost 1 Billion on this deal?

 

[Turk]

Bear Stearns was just trading at $7.30 !!!!!

Shouldda took a chance like Pabs did with TMA...

 

[Gary Allan]

Originally Posted By: Brett Miller
How about the Bear Sterns investor that lost 1 Billion on this deal?



He/she surely has my sympathies. The money was never really there ..at least in any "in phase" relationship with reality. It was a speculative tag on the right to earn potential gains on ventured money that was pulled out of vapor.

(Visions of harmonic corrective devices that inject "hollow" voltage to eliminate sags in the sine wave)

 

[Shannow]

Originally Posted By: Gary Allan
He/she surely has my sympathies. The money was never really there ..at least in any "in phase" relationship with reality. It was a speculative tag on the right to earn potential gains on ventured money that was pulled out of vapor.


Ain't that the truth ?

http://books.google.com.au/books?id=mTWt...9EWFWxkKk&hl=en

JP Morgan holds $45T in derivatives, against a $15T GDP.

That's an almighty house of cards.

 

[1sttruck]

[Enron as example]

"These are not examples of "free market" failures."

???? How are they not, and it being so obvious that it is, how is it that a this late date that you could think otherwise ?

http://en.wikipedia.org/wiki/Enron_scandal

The Enron scandal was a financial scandal that was revealed in late 2001. After a series of revelations involving irregular accounting procedures bordering on fraud, perpetrated throughout the 1990s, involving Enron and its accounting firm Arthur Andersen, it stood at the verge of undergoing the largest bankruptcy in history by mid-November 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable. Enron filed for bankruptcy on December 2, 2001.

...In the early 1990s the Congress of the United States of America passed legislation deregulating the sale of electricity. It had done the same for natural gas some years earlier. The resulting energy markets made it possible for companies like Enron to thrive, while the resultant price volatility was often bemoaned by producers and local governments.[2] Strong lobbying on the part of Enron and others, however, kept the system in place.[3][4]

 

[Pablo]

Deregulation does not equal "free market". People with an agenda like to cite Enron when propping up government control. But let's look at a simple fact:

There are criminals in all forms of all walks of life. The people at Enron were breaking laws. Both written formal laws and moral "laws". I cite your own source:

"Enron's collapse also contributed to the creation of the U.S. Sarbanes-Oxley Act (SOX), signed into law on July 30, 2002. It is considered the most significant change to federal securities laws since FDR's New Deal in the 1930s. Other countries have also adopted new corporate governance legislations. This law provides stronger penalties for fraud and, among other things, requires public companies to avoid making loans to management, to report more information to the public, to maintain stronger independence from their auditors, and most controversially, to report on and have audited, their financial internal control procedures. However, certain provisions in the legislation are currently under review in Congress."
And the fact that they prosecuted the dirty [censored] with laws that were in place at the time.
Clearly there was regulation in place - energy use/distribution/control was not and nor really never has been "free market" in the USA (nor elsewhere in the world). The pendulum swings in the USA - and my argument stands - either have a true and real free market or total control. The middle ground leads to higher end user costs, corruption and odd things coming out of our Congress such as ethanol subsidies……(no corruption there!!)

 

[VeeDubb]

There are also two types of regulaton. 1. Protection of property rights through transparency and clear liability rules; and 2. direct market regulation of prices and the types of contracts people can write (e.g. rent control, subsidies, bailouts, etc). The first type of regulaton enhances competitive markets and lead to better outcomes because it reduces criminal activity so counter-parties are more likely to trust either other. The second type of regulation is classic socialism and leads to massive inefficiencies and supply shortages. The big problem is that our politicians don't seem to understand the difference between the two.

 

[VeeDubb]

Originally Posted By: Gary Allan
Quote:
How is the 7% annualized inflation rate doing for you on that 80%?


What's the frequency of default on every financial fad? They seem to be spaced out pretty evenly. S&L, DOT.COM, etc..etc. Some few surely had a decent cue for grabbing a chair well before the music stopped.


Can you explain?

 

[Gary Allan]

Look at every evolution of "gain". They effectively, in the final analysis, end up being "financial fads". Now, unlike other fads (the hula-hoop, Frisbee, Mr. Bubble, Lawn Darts, etc.) where the vendors attempt to capitalize on the craze for profits and may be left holding a product that he has to throw in the discount shelf, here we have a sales pitch for a ponzy scheme. That is, something that is promoted and fostered that, when full public participation is realized, it's an assured loss. Meanwhile, the whole society is paying for the wagering speculation ..not just a few vendors of plastic junk.

Everyone's 401k money was in the market

Everyone's equity was in the market

So, when you "invest" ..the odds mandate that you must lose.

It's, effectively, a lottery. Has there really been any "real" growth that hasn't been offset by other costs or dilution?

This is really easy for me to see.

Now it surely can be argued that to NOT participate can be worse ..but that doesn't bely the flaw in the process. There isn't any "real" gain ..but rather attempts to avoid losses. You're competing for a larger share of a declining environment. Someone (many of them) are assured to lose more and more.

 

[Shannow]

Gary,
you should have seen the "lights on" moment with my Dad mid last year.

About 15 years ago, the Govt (not the Cons), took a tax cu and placed it into savings, via a compulsory amount of your wage going into superannuation...seemed like a great idea at the time.

Over the last 15 years, the accumulated funds are huge, and the super funds HAVE to invest...in anything. When I mentioned the great Aussie analogy of "betting on two flies on a wall", he reluctantly agreed.

My super fund "earned" 14.5% last year. Mum's "lost" 8% of her retirement earnings. Should I giver here some of mine ?

The more we thought, maybe retirement should be two parts, one market based, and the other the classic "Ponzi" scheme, where your savings go into public infrastructure (dams, roads, hydros) today, and the payments in 20 years time come out of the current account (literally, those who are saving at that time)

 

[Gary Allan]

Quote:
My super fund "earned" 14.5% last year. Mum's "lost" 8% of her retirement earnings. Should I giver here some of mine ?


No, not unless you're a really ...REALLY nice and loving child. You won on your share of the lottery. She lost on her share of the lottery. The point is, it's a lottery. In your case, just like in our DOT.COM bubble, the large tail wagged the dog. I think that there was much more money in the speculation of the market ..than the market was worth.