The collapse of major US financial institutions continues unabated.
Here’s what Greenspan thinks about our situation.
Merrill Lynch, the world’s largest broker, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.
Merrill agreed to the BofA sale, which represents a huge premium to its closing price on Friday of $17 a share, after talking to several other potential acquirers, including Morgan Stanley.
Morgan turned down a possible acquisition because it couldn’t examine Merrill’s books in 48 hours, a person close to the matter said.
Merrill plans to make an internal announcement to employees sometime between 8 and 9 am Monday morning.
Merrill came under pressure to find a merger partner came after its liquidity began “evaporating” Friday and the firm became worried about a sharp decline in share price on Monday, according to people inside the firm.
Merrill is expecting huge job losses with the merger. The brokerage division will stay intact, but there will be large-scale reductions in workforce. CEO John Thain is also expected to leave.
“It’s over,” said one senior Merrill official.
“CEO John Thain is also expected to leave.” With a substantial severance package, no doubt.
Gordon Gekko, “What’s worth doing, is worth doing for money”.
This is bad.
Fear is setting in.
If you have your money is a major brokerage, you are wondering if it is safe to have anything to do with that business, and will jump to pull the money out. That means selling stocks, getting cash and putting it somewhere safe (like under the mattress) until this mess clears up in a couple of years. A stock market run is much worse than a bank run.
Where do you put your cash? The FDIC insured stuff is a joke, because after a couple of minor bank failures 60% of the FDIC fund is gone.
Bush and McBush can claim that the “Financial Markets are fundamentally sound” until they are blue in the face, but that doesn’t change reality… over the last eight years they have presided (or allowed) the largest financial crisis in the history of the USA to take place. You might want to blame 8 years of Clinton, but that does not change the fact that 8 years of Republican rule have not fixed the problem, and have actually made it much much worse.
it reminds me of that scene from the movie “Sneakers”
Posit: People think a bank might be financially shaky.
Consequence: People start to withdraw their money.
Result: Pretty soon it is financially shaky
Conclusion: You can make banks fail.
Just yesterday my dad called me and told me that the Spanish news had recommended people to withdraw their money from Washington Mutual cause it was gonna collapse this week.
Americans have lost their faith in the banking system.
Aye, laddie, the haggis is in the fire fer sure.
If I were a Bank of America shareholder I’d be wondering why they paid $29 a share for a company trading at $17, that would probably drop even lower as time goes by.
If I had a bank account at the Bank of America I’d be thinking about withdrawing my money.
Looks like McBush will have to find someone else to be his number one cheerleader on Wall Street. John Thain will be out looking around for a new job. BofA certainly ain’t going to think well enough of his performance to keep him on at Merrill-Lynch.
Maybe he’ll be taken on as McCain’s chief fundraiser?
and Merril Lynch’s new slogan will be similar to their old one of being bullish on america………..
Boom Boom, out go the lights !
Yet, 28% of the folks think W is doing a good job.
And more than that seem to think W2: The Sequel will be even better.
I wonder if they are auctioning off the bull. It would look nice in the yard of my tailor.
#10
28% of Germany probably though Hitler was doing a good job at the end when he was putting a bullet into his brain.
In the end these people reward themselves
All very similar to the American automotive industry
It all comes down to false values of wealth and integrity
Legends only in their own minds and our cash
Just what exactly do all you folks who blame this on Bush and the Repubs think was his biggest mistake?
And what do you propose should be done about it?
Nationalize the banks?
Perhaps this is all just another opportunity for a Bush/McCain bash.
Lotsa…I like to think it was the ‘hands-off’ regulation of the industry during a time it needed strong oversight. Many R’s like to pretend that all these regulations stifle business and innovation, but history clearly shows that the regs and oversight are there for a damned good reason. Is today’s banking crisis is yet another example? Those who follow this industry more closely can tell us.
McBush and Greenspan seem at odds:
“I’m not in favor of financing tax cuts with borrowed money (from China and Japan),” Greenspan said. “I always have tied tax cuts to spending.”
In defense of the McBush plan, most Americans over 60 should not see any ramifications.
Let’s steal the bull and replace it with that metal pig in Pike’s Market.
Then all the smelly maggot-infested communist hippies that hang around the waterfront will follow it to Wall Street and become rich capitalists and give away free marijuana cigars.
WAMU has been downgraded to junk status and AIG is off 80% so far this year. It’s going to take months for the financial sector and US house prices to stabilize.
Jittery week ahead. Carnage in London already even after B of E injected additional 5 billion pounds (on top of the 33 billion).
Looks like the cognisenti running these companies are not half as smart as everyone thought they were and when they made bad decisions they were doozies- altho the golden parachutes will make life tolerable. I wonder how many of these guys are products of the Harvard Biz School?
Who needs terrorists when you have financial institutions? They blowed you up real good.
Don’t you mean Bank of America hell?
So, are we having a BANANA ???
“Alfred Kahn, an economic adviser to President Carter, was told by the White House to avoid using the word “recession” and so substituted “banana”. In 1978 he declared that: “We’re now in danger of having the worst banana in 45 years.”
Or is this the REPUKES ROTTEN BANANA – AFTER EIGHT YEARS OF REPUKES ***STEALING IN ALL DIRECTIONS*** ??? The WORST SINCE THE “GREAT BANANA” FOLLOWING THE 1929 CRASH ???
This Merrill-Lynch business isn’t finished yet.
Rumor has it that BofA might still back out, it is still looking at the books, and is depending on Government (you the Taxpayer) guarantees.
The stock is trading well below the BofA offer price, which means that people ‘in the know’ are not taking the offer seriously… people that profit on pennies worth of stock movement, yet they are passing on whole dollars worth of spread.
Greenspan smelled this bad banana years before…he got out while the gettin’ was good.
If you’ve never been a corporate officer or taken a company public, raised rounds of funding and/or directed IR, you wouldn’t know better.
I do.
They’re all scoundrels. Dirty rotten bananas…each and every one of them.
BTW, don’t even get me started on the movie “Sneakers.” I worked for a major PC company at the time and Redford accepted our product placement deal and then backed out, claiming he was against “blatant commerciality” in his films.
He then proceeded to make the movie using a competitors product line.
They are ALL stinky bananas!
BTW – all of this begs for a flat tax.
# 17 bobbo said
Yea, I too see K-Mart in my banking/stocktrading future.
Don’t you mean Wally*Mart? IIRC, K-Mart went bankrupt.
J/P=?
I did PR for Kmart…at the time, they were controlled by the mob. Point being, again – they’re ALL crooks.
Don’t worry, technology will save us.
“in 2007 Thain was the best-paid CEO among the S&P 500 companies, receiving $83.1 million”
Merrill’s stock sure is down. Shareholders taking a beating.
But not Thain, he’s got lots of your shareholder money even though the stock plummeted.
Can you say “Shareholder Revolt”?
How many other companies have Boards of Directors that are complicit in stealing from the rank and file shareholdres, and giving to the CEO no matter what?
Its not just a problem at Merrill….
You will see.
Your.
Stocks.
Slip.
Away.
Right into CEO pockets.
They don’t work for you, silly shareholders.