phil scott wrote:
> On Mar 10, 2:41 pm, Vide...@[EMAIL PROTECTED]
wrote:
>
>>http://biz.yahoo.com/ap/080310/credit_woes.html
>>
>>Investment Banks Plunge on Market Fear
>>Monday March 10, 3:06 pm ET
>>By Dan Seymour, AP Business Writer
>>
>>Investment Banking Stocks Sink to Multiyear Lows on Concerns About
>>Unraveling Market
>>
>>NEW YORK (AP) -- Investments banks' stocks plunged to their cheapest
>>prices in years Monday, as the unraveling of a host of investments
>>raised the prospect of more losses on Wall Street and a seize-up in
>>financing.
>>ADVERTISEMENT
>>Traders and analysts said Monday the distaste for risk in the bond
>>market -- reflected in depressed or nonexistent trading of mortgage
>>bonds, auction-rate securities and various kinds of short-term debt --
>>has reached a new height.
>>"There is a tremendous amount of anxiety in the market," said T.J.
>>Marta, fixed-income analyst at RBC Capital Markets. "Things are
>>bleak."
>>Prices in the bond market determine how much it costs everyone from
>>utility companies to college kids to borrow money. The tumult in the
>>bond market threatens to crimp banks' profits, making it harder to
>>borrow money to start a business or buy a house or a car.
>>Gary Wedbush, head of capital markets at Wedbush Morgan, said the
>>latest round of selling has been forced by something investors refer
>>to as "deleveraging."
>>Many investment banks and hedge funds employ "leverage," or placing
>>bets with borrowed money. Leverage magnifies profits when bets pay
>>off, but if the investments purchased with borrowed money go sour the
>>position must be unwound to repay the lender.
>>With prices for a range of investments in distress, Wedbush said many
>>funds and banks are deleveraging, forcing a frenzy of selling.
>>"Prices are just getting crushed because people are all trying to fit
>>through the same door at the same time," he said.
>>Deleveraging poses a double-edged sword to investment banks, Wedbush
>>said. Some banks may be forced to sell their investments at a loss to
>>meet the demands of their lenders. And, as lenders themselves to other
>>investors, some banks may lose money on their loans if clients cannot
>>unwind in time.
>>RBC's Marta said banks are submitting a growing number of "bid lists,"
>>an indication some banks that lent money to hedge funds have seized
>>their collateral and are auctioning it off.
>>Investment banks need to sell bonds, commercial paper, repurchase
>>agreements or other kinds of paper to raise cash to finance buyouts,
>>place bets on stocks or bonds, and issue loans.
>>Brad Hintz, an analyst with Sanford C. Bernstein, said as borrowing
>>grows tougher banks will have to put up more collateral to borrow
>>money. Because banks only have so much collateral to put up, they will
>>not be able to raise as much capital and that could squeeze profit, he
>>said.
>>Hintz, who used to be treasurer of Morgan Stanley and chief financial
>>officer of Lehman Brothers Holdings Inc., added: "On days like today,
>>I'm glad I'm neither."
>>Bear Stearns Cos., whose spokesman Monday denied rumors that the
>>brokerage faces a liquidity squeeze, led shares in the investment
>>banking sector downward. The bank's stock plunged more than 9 percent
>>to $63.53 in afternoon trading. The shares earlier in the session
>>touched as low as $60.26, the cheapest trade since March 2003.
>>Citigroup Inc.'s stock fell almost 5 percent and slipped below $20 for
>>the first time since the bond market crisis of the late 1990s. The
>>bank's stock has lost almost a third of its value in 2008 and more
>>than half its value in the past year.
>>Merrill Lynch & Co. and Morgan Stanley each slipped more than 3
>>percent and notched their lowest trades since 2003. Lehman Brothers
>>sank nearly 7 percent and registered its cheapest trade since 2004.
>>Even Goldman Sachs Group Inc., which has won plaudits as the bank that
>>has navigated the credit crisis the best, dipped more than 2.5 percent
>>and hit its lowest trade since late 2006.
>>AP Business Writer Stephen Bernard in New York contributed to this
>>re****t.
>
>
>
>
> ts a good artlicle but notice the spin....emphasis on 'squeezed bank
> profits'...when the real issue is banks tanking by the hundreds..what
> profits...many are going under.... spin in an attempt to make things
> look llke the mess is controllable.
>
> it isnt imo (unless we repatriate mfgr, cut the size and cost of
> govt by 50 to 80% now.... if we wait it will happen regardless, but in
> that case because the tax base and business will collapse, defunding
> govt.... even then this nation has sold its chickents, chicken coop
> and farms to buy trinkets and to fund massive bloat and corruption in
> govt)
With all government's faults, it may be best for government to pay for
some things
presently funded privately. In other words, sometimes it's cheaper to
have higher
taxes and less money in your pocket if that means fewer bills each month.
Mark M.
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