The Bear Saga

The Bear is bleeding and this time its bleeding hard. Citic doesn't want any part of the deal.
Citic learned its lesson the hard way from the Backstone deal. I think JPM also doesn't want any part of Bear either. Its mostly acting at the behest of the Fed to save some of its money tied to Bear. JPM wouldn't do the deal without the Fed's securing it. Will this save the Bear for another "28 days" before vultures start tearing off it in parts.

Looking at some of last week's events its hard not to relate them to the Bear. Bernanke asking the need for Banks to raise capital. The Fed turning its Term Auction Facility into a Permanent Auction Facility. S&P saying on Thursday the credit crisis is over. President Bush's address.

Telegraph is reporting Bear sucks to Wall street's fear. The article raises the possibility that the Bear crisis will trigger the situation like Great Depression of 1929. Will it ? For the fear to grapple over Wall street into a Great Depression what would be a good sign Dow falling of 1-2% or 30-50% ? Dow is still overpriced.

Within a week 2 people used the word "ridiculous" to save the stocks. 1. Dick Bove of Citigroup's stock price on the "rumors" that C's capital ratio was going to be 8.8%. I wonder why Citi didn't respond :-) 2. Alan Schwartz of the BSC liquidity position. And alas within one day half the capitalization is wiped out. Perfect example of what high leverage can do to you.

Few questions :-

LEH who is leveraged more than 30 obtained $2 billion credit line from 40 banks to stave off the current crisis. Is it sowing the seed for another day ? This article in the Telegraph reports that LEH swap spreads rocketed to 465 on Friday an indication to Bear like crisis? FRE and FNM bonds were in free fall on Monday indicating a wave of further bank write-downs.

Where is Goldman in all this mess? Is it busy "shorting" the banks and brokerages as it did to make record profits in Aug-Dec 2007?

Is there any reason why Bear will post its earnings report on the closing bell on Monday and Fed's cutting interest rates on Tuesday morning ? Will the Fed able to stop the sell-off, only if the past (actions) is any indication ;-)

Will the Fed intervention in the Bear crisis and further more crisis to come stave off the selling ? Unlikely, what it will do though is give sellers enough time "28 days" for more controlled sales than fire-sales ? Do you think most of the volatility in the marketplace in the last few months is caused by individual investors or the big institutions preforming "programmed sales" ?

S&P and Fitch were "quick" to downgrade Bear's ratings. Why don't they act so "quickly" w.r.t to Ambac and MBI ratings or are they waiting for Bear like sell-off. Hasn't the market given its verdict on these 2 already?

Are we going to see further write-downs in MER, UBS and C?

As children we have saved money in the "piggy-banks". Now I wonder why did we call them "piggy" banks. Did those cute-little-things represent the greed of the current brokerage/banking system? Was there a lesson there?

Why do I still see executive's pay in millions-and-millions of dollars? Is it the way of "responsible" managements "to contain the crisis"?

Are random events related (lol...) ? Is the storm that hit Atlanta an indication of what's to come on Wall Street next week ?