Economy Blog

Today we bring you two breaking hedge fund stories from the dental community……
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Below is out (shortened) weekly round-up of stories in which you might be interested, but which didn’t graduate to full stories on AllAboutAlpha.com.  As usual, all these stories are listed in the scrolling news ticker you see at the top of your screen.
Lawrence Cohen, a NY lawyer, dives deeper into the legal issues surrounding the Bulldog [...]…
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At times like these, with Bear getting flushed down the 14th Floor Mens, you school girls need a voice of authority to give you a sense of history. Show you how we got here. That voice is me. So gather round, kids. Lesson time, courtesy of Bessie’s History of Bear Stearns: A Timeline.

– 1923: Bear Stearns is founded as an equity trading house by Joseph Bear, Robert Stearns and Harold Mayer with $500,000 in capital. While he felt “gipped” at the time, Mayer and his descendants are pretty psyched that they voted ix-nay on Bear Stearns Ayer-May. In a remarkable symmetry, Bear will probably end up with the same $500,000 it started with in 1923.
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The Real Story Wrap, March 20

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PDCF borrowings, the scheme announced last sunday night are running at $28.8 billion as of last night.
ADD:
Credit extensions such as the arrangements involving JPMorgan and Bear Stearns averaged $5.5 billion for the week but had 0 outstanding balance as of last night.
EmailThis
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We’re a hardened lot here at DealBreaker. We laugh in the face of our failures. As regular readers know well, we try to provoke laughter at the failures of others. So it was surprising when we found ourselves getting a bit choked up this morning as we read the Metro section of the New York Times. Peter Applebome rides with the commuters from Chappaqua to discover fear and self-loathing aboard the 6:13.

The pilgrims from Chappaqua trudged in from the cold drizzle Wednesday morning and gathered in drowsy silence like crows on the covered overpass above the tracks until 6:11, when someone said, “It’s time to get our heads bashed in.” Thus inspired, they descended to the platform, piled onto the largely empty cars, and then, either asleep, reading a newspaper, or with heads bowed as if in prayer over BlackBerrys, journeyed in silence on the 32.4 miles to Grand Central.
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GaldalFed: Hey, Boss! How’s everything? Just reading a Bloomberg article that mentioned both of us, and I thought I would drop you a line.

Maestro69: Sec

GaldalFed: Sure, Sure.

Maestro69: Ok i’m here. What did it say? I myself have refrained from reading the newspapers since back in, oh, 2004.
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Gold has not had a good week. The April contract closed at $1004.30 on Tuesday. It dropped $59 yesterday and it’s down another $25.30 today.

From Karl Marx in 1867:

A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties. …
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OMG! You guys! CIT totally had to borrow from emergency credit lines provided by (we’re told) three banks! It shares and bonds promptly took a nosedive. The company found itself unable to borrow by issuing commercial paper after a ratings downgrade.

So wait! Maybe this whole credit crunch isn’t over even though the President told us he’s an “optimistic fellow.”

Related: CIT was founded 100 years ago this year.

C…
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I love this guy. Santelli needs his own reality show. This needs to happen.

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Bear Stearns may have perfected the art of the blowup, but hedge funds invented it. Not only that, they gave birth to the very language we use to describe it.

Bailout. Blowup. Collapse. Hedge fund parlance is a ready made goldmine for describing the fate of Bear Stearns.

The collapse of Long Term Capital Management prompted a Wall Street bailout; Amaranth became the largest-ever hedge fund blowup when it lost $6.6 billion; the collapse of subprime mortgage marred hedge fund performance. Turning a discrete event in the financial market into an identifiable, memorable term like Black Monday or the Great Depression is impressive enough. But fleshing out a vocabulary perfectly suited to express the gamut of profit-and-loss within the financial market? That is a rhetorical achievement—and that achievement is the rightful domain of the hedge fund industry. …
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The Fed has massively cut rates over the last six months or so. The last time we had massive Fed easing, in the wake of 9/11, we wound up with the housing bubble. The time before that, when the Fed eased to pull us out of the recession of the early nineties, we wound up with the internet bubble.

So, of course, the natural question is where the next bubble will be. We’ve got strong inclinations to say energy, if only because the talk of rising global energy demand reminds us a bit too much of the talk of rising broadband demand we heard in the late nineties. Eventually the demand caught up with supply, but only after years of over-supply. …
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Stock markets have rebounded this short trading week. Fortunately Black Monday stayed only with Bear Stearns and the fear hasn’t been spread all over. FED cut by 75 bp below street expectation but it has been taken as a good step. Gold and crude oil stepped down from record prices and US dollar bounced from bottom.Let’s have a look to broadly expected earnings results for brokerages.Both Lehman Bros and Goldman Sachs reported this week significant profit decline, 57% down respectively 53%. Even thought they beat estimates which returns faith in financial sector. As well as Morgan Stanley on Wednesday with decline 42% (top analyst estimates). After Bear Stearn collapse there were a lot of fear about earnings this week. Nevertheless the most risky is seen result of Merrill Lynch. This company has more than 30 bln USD in risky loans. Also liquidity ratio is the lowest (52%) among financials. The best liquidity has Lehman Brothers with 74%….
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Big Board Break Down: Lucky Guess?

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As long as we’re having video entertainment day at DealBreaker, we might as well put up this collection of “I want my two dollars” clips from Better Off Dead. (Thanks to commenter “36th Chamber” for the link.)

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Jon Stewart on Bear Stearns, George Bush and Jim Cramer.

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Don’t:

- Stick your tongue in someone’s ear during dinner

- Kiss like a St. Bernard

- “Act like a complete idiot”

- Have Asperger syndrome

- Be a Nazi

The Rank-Link Imbalance [NYT]

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Harbinger Capital, run by Philip Falcone, was short Bear from last summer until Monday. Obviously, they just made a truckload of money, and obviously Falcone’s going to want to party. How convenient that he just bought the old Penthouse spread on 67th street, the perfect venue for a bacchanal like this. Everyone’s going to be there, including the Bear guys. Alan Schwartz will unfortunately not be able to attend, as he’s scheduled to give a repeat of his CNBC interview from last week, and he really can’t afford to pass up paying gigs. Jimmy Cayne will be brought out and roasted like a suckling pig, and even Charlie Gasparino will be making shameless use of his press pass to gain entry. The invite says “8 pm until ???” but Falcone’s old and will probably be kicking people out around 2. Luckily, Jamie Dimon has graciously offered to host after-hours at 383 Madison, noting on the e-vite, “I can do whatever the fuck I want with this place, I own this bitch. Piss on the walls for all I care. Just kidding, I do care, I told you that yesterday. But I really think the only way we’re going to make this “merger” work is by tearing this thing down and starting fresh so, I’m just say, if you have to relieve yourself, don’t let common decency stop you. All you’d be doing is what J to the Cay has been doing for the past 20 years.”
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You’ve seen the company collapse, now get the t-shirt. Reuters reports that an entrepreneur has created a Bear Stearns collapse memorable t-shirt and put it up on Ebay. For just $17.99, you too can own a t-shirt reading ?…
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