Comments on: A Conspiracy Directed By The Fed http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/ west coast cap peelers Thu, 18 Mar 2010 01:48:15 -0600 http://wordpress.org/?v=2.9.1 hourly 1 By: sarabeth http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75590 sarabeth Tue, 01 Apr 2008 10:35:22 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75590 <blockquote>I believe we were talking about common shareholders (at least I was).</blockquote> Yes, me too. I'm talking about how bankruptcy typically works in practice (as opposed to theory) for holders of common stock. How bankruptcy judges don't actually implement "absolute priority". <blockquote>Also, since the bankruptcy did not occur we don’t know exactly what people would have received.</blockquote> Funny how that didn't stop you before when you confidently declared (in #10) that stockholders of Bear Stearns would have received zero if bankruptcy had been allowed to occur. Now, when you're challenged, you hide behind this absurd "how can we ever know". <blockquote>Holders of BSC-PX, BSC-PE, BSC-PG, BSC-PF, as well as other bond holders and creditors will always be better off than common shareholders.</blockquote> Yes, but that's not the point. You're just playing absurdly dishonest games...

I believe we were talking about common shareholders (at least I was).

Yes, me too. I’m talking about how bankruptcy typically works in practice (as opposed to theory) for holders of common stock. How bankruptcy judges don’t actually implement “absolute priority”.

Also, since the bankruptcy did not occur we don’t know exactly what people would have received.

Funny how that didn’t stop you before when you confidently declared (in #10) that stockholders of Bear Stearns would have received zero if bankruptcy had been allowed to occur. Now, when you’re challenged, you hide behind this absurd “how can we ever know”.

Holders of BSC-PX, BSC-PE, BSC-PG, BSC-PF, as well as other bond holders and creditors will always be better off than common shareholders.

Yes, but that’s not the point.

You’re just playing absurdly dishonest games…

]]> By: Jimmy http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75588 Jimmy Tue, 01 Apr 2008 01:30:56 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75588 "Anyone who thinks stockholders typically get zero if a firm declares bankruptcy" I believe we were talking about common shareholders (at least I was). Holders of BSC-PX, BSC-PE, BSC-PG, BSC-PF, as well as other bond holders and creditors will always be better off than common shareholders. Also, since the bankruptcy did not occur we don't know exactly what people would have received. “Anyone who thinks stockholders typically get zero if a firm declares bankruptcy”

I believe we were talking about common shareholders (at least I was). Holders of BSC-PX, BSC-PE, BSC-PG, BSC-PF, as well as other bond holders and creditors will always be better off than common shareholders. Also, since the bankruptcy did not occur we don’t know exactly what people would have received.

]]> By: sarabeth http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75580 sarabeth Mon, 31 Mar 2008 11:03:11 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75580 Anyone who thinks stockholders typically get zero if a firm declares bankruptcy, a) has very little idea how the process of bankruptcy works in practice, b) somehow managed to miss all the Bear Stearns stories which pointed out how many large stockholders thought they would probably walk away with much more than $2 in bankruptcy. Anyone who thinks stockholders typically get zero if a firm declares bankruptcy, a) has very little idea how the process of bankruptcy works in practice, b) somehow managed to miss all the Bear Stearns stories which pointed out how many large stockholders thought they would probably walk away with much more than $2 in bankruptcy.

]]> By: Jimmy http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75578 Jimmy Mon, 31 Mar 2008 06:14:42 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75578 #10 I don't see where I ever said they were the same. I was simply agreeing with another person's comment about why it was a necessary action and how the shareholders are definitely better off getting anything ($2, $10, whatever) than they would have been with "zero" if bankruptcy had been allowed to occur. Therefore the stockholders aren't getting robbed if they get something greater than "zero". #10
I don’t see where I ever said they were the same. I was simply agreeing with another person’s comment about why it was a necessary action and how the shareholders are definitely better off getting anything ($2, $10, whatever) than they would have been with “zero” if bankruptcy had been allowed to occur. Therefore the stockholders aren’t getting robbed if they get something greater than “zero”.

]]> By: sarabeth http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75574 sarabeth Mon, 31 Mar 2008 00:57:11 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75574 "It was necessary for the Fed to prevent a Bear Stearns bankruptcy" and "It makes sense for the Fed to direct JPMorgan to pay no more than $2 a share to Bear Stearns stockholders" are very different statements. Poles apart, one might say. “It was necessary for the Fed to prevent a Bear Stearns bankruptcy” and “It makes sense for the Fed to direct JPMorgan to pay no more than $2 a share to Bear Stearns stockholders” are very different statements. Poles apart, one might say.

]]> By: Jimmy http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75571 Jimmy Sun, 30 Mar 2008 23:56:16 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75571 #8 Those are some great points Dave. I agree that the media blitz regarding a BSC bankruptcy would have scared a ton of people. I was a little nervous just hearing about the "possibility" of a major financial institution like that going bankrupt. It's like the fed rate cuts that have brought us to 2.25 percent; the Fed basically picked the lesser of two evils by reducing rates (to salvage the collapsing economy) and letting the dollar and inflation suffer. In BSC's case it was the evil of a market collapse vs. the evil of a bailout. The bailout was obviously the better choice. I’d rather be at 6% fed funds but it just wasn’t possible because then we’d "really" be seeing bankruptcies and bailouts. I also agree with the concept that there is corruption and conspiracy in the world but, unfortunately, that will never change. Speaking of conspiracies, I'm feeling a sense of The Manchurian Candidate in the current Presidential race; all the unquestioning followers that base their support on speeches alone. #8
Those are some great points Dave. I agree that the media blitz regarding a BSC bankruptcy would have scared a ton of people. I was a little nervous just hearing about the “possibility” of a major financial institution like that going bankrupt. It’s like the fed rate cuts that have brought us to 2.25 percent; the Fed basically picked the lesser of two evils by reducing rates (to salvage the collapsing economy) and letting the dollar and inflation suffer. In BSC’s case it was the evil of a market collapse vs. the evil of a bailout. The bailout was obviously the better choice. I’d rather be at 6% fed funds but it just wasn’t possible because then we’d “really” be seeing bankruptcies and bailouts. I also agree with the concept that there is corruption and conspiracy in the world but, unfortunately, that will never change.

Speaking of conspiracies, I’m feeling a sense of The Manchurian Candidate in the current Presidential race; all the unquestioning followers that base their support on speeches alone.

]]> By: Dave K http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75570 Dave K Sun, 30 Mar 2008 21:26:22 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75570 "The stockholders and employees of Bear Stearns are being robbed by JPMorgan in a conspiracy directed by the Fed" BSC was about to declare bankruptcy... IRT shareholders, "Anything" is better than "zero" don't you think? The original $2 price was a simple placeholder to show that the company was not going to be allowed to go bankrupt. It was to prevent what would have been "a very bad" reaction to a Monday announcement of "BSC is bankrupt"... The $2 placeholder provided JMP more time to get into the books further and come back with a "better" (based on individual interpretation) offer. Again, anything was better than having an announcement that "Bear Stearns is bankrupt"... It's far from the conspiracy being portrayed here; it was a measure taken to avoid a mkt collapse and resultant collapse in U.S. sentiment (even lower than it currently is). Did we really want people frantically withdrawing their money and causing further damage to our economy? Is there corruption in the world? Obviously the answer is yes but there are far less conspiracies than you imply... “The stockholders and employees of Bear Stearns are being robbed by JPMorgan in a conspiracy directed by the Fed”

BSC was about to declare bankruptcy… IRT shareholders, “Anything” is better than “zero” don’t you think? The original $2 price was a simple placeholder to show that the company was not going to be allowed to go bankrupt. It was to prevent what would have been “a very bad” reaction to a Monday announcement of “BSC is bankrupt”… The $2 placeholder provided JMP more time to get into the books further and come back with a “better” (based on individual interpretation) offer. Again, anything was better than having an announcement that “Bear Stearns is bankrupt”…

It’s far from the conspiracy being portrayed here; it was a measure taken to avoid a mkt collapse and resultant collapse in U.S. sentiment (even lower than it currently is). Did we really want people frantically withdrawing their money and causing further damage to our economy? Is there corruption in the world? Obviously the answer is yes but there are far less conspiracies than you imply…

]]> By: TO http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75547 TO Tue, 25 Mar 2008 01:14:28 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75547 # sarabeth wrote: maybe your BS isn’t worth 2c either? Posted 24 Mar 2008 at 7:41 am ¶ That's deep. #

sarabeth wrote:

maybe your BS isn’t worth 2c either?

Posted 24 Mar 2008 at 7:41 am ¶

That’s deep.

]]> By: sarabeth http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75546 sarabeth Mon, 24 Mar 2008 17:53:16 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75546 <blockquote> why take on a company that could net you a gigantic loss if things go as poorly as they could?</blockquote> Every single stock you can buy in the market would net you a huge loss if things go as poorly as they could. That's why stocks are a risky investment. Investors, of course, are perfectly willing to make such risky investments all the time. And that includes widows and orphans and housewives and what have you. The fact that your assets might go down in value tomorrow -- maybe a lot -- doesn't stop them from having a real and meaningful value today. So even Bear Stearns' stock has a real, meaningful value today. At some price they are fairly valued; at a much lower price they are grossly undervalued. It is clear that $2 a share constituted gross undervaluation. For the Fed to conspire to have Bear Stearns bought out at $2 a share is an unconscionable act of economic skullduggery.

why take on a company that could net you a gigantic loss if things go as poorly as they could?

Every single stock you can buy in the market would net you a huge loss if things go as poorly as they could. That’s why stocks are a risky investment.

Investors, of course, are perfectly willing to make such risky investments all the time. And that includes widows and orphans and housewives and what have you.

The fact that your assets might go down in value tomorrow — maybe a lot — doesn’t stop them from having a real and meaningful value today.

So even Bear Stearns’ stock has a real, meaningful value today. At some price they are fairly valued; at a much lower price they are grossly undervalued. It is clear that $2 a share constituted gross undervaluation. For the Fed to conspire to have Bear Stearns bought out at $2 a share is an unconscionable act of economic skullduggery.

]]> By: tom http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/comment-page-1/#comment-75545 tom Mon, 24 Mar 2008 17:26:09 +0000 http://www.1115.org/2008/03/24/a-conspiracy-directed-by-the-fed/#comment-75545 doesn't the real value of BS rely on exactly how much of a loss their total assets are worth? that really isn't going to be readily apparent until we hit rock bottom with the housing market, which is why even at a sweet $2 a share it wouldn't necessarily make sense to take on that possibility without the Fed guarantee. the fact that BS could essentially be a $30B loss for JP Morgan is why it is a bail out, they're taking a chance that otherwise isn't a logical one. why take on a company that could net you a gigantic loss if things go as poorly as they could? doesn’t the real value of BS rely on exactly how much of a loss their total assets are worth? that really isn’t going to be readily apparent until we hit rock bottom with the housing market, which is why even at a sweet $2 a share it wouldn’t necessarily make sense to take on that possibility without the Fed guarantee. the fact that BS could essentially be a $30B loss for JP Morgan is why it is a bail out, they’re taking a chance that otherwise isn’t a logical one. why take on a company that could net you a gigantic loss if things go as poorly as they could?

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