Meredith Whitney downgraded Bear Stearns today Friday, March 14th, 2008:
“Yep, she did it. The ratings agencies are considering a downgrade. I
thought it was a joke when I first heard it. Let’s just imagine that I
used these wise sources as an info source to make my money! The ratings
agencies and sell sides are jokes that I can no longer laugh at.”
It’s a good thing no one listened to that damn blogger who
has the gall to charge money for his research and opinion. We had to
listen to him bitch and moan for 2 months before… Is this the Breaking of the Bear? (January 2008)”
Bear Stearns is in Real trouble
Bear Stearns will soon be, if not already, in a fight for its
life… the biggest issues don’t seem all that prevalent in the media
though. Bear Stearns is in a real financial bind due to the assets that
it specialized in, and it is not in it by itself, either. For some
reason, the Street consistently underestimates the severity of this
real estate crash. If you look throughout my blog,
it appears as if I have an outstanding track record. I would love to
take the credit as superior intelligence, but the reality of the matter
is that I just respect the severity of the current housing downturn –
something that it appears many analysts, pundits, speculators, and
investors have yet to do with aplomb. With a primary value driver linked
to the biggest drag on the US economy for the last century or so, Bear
Stearn’s excessive reliance on highly “modeled” and real
asset/mortgage backed products in its portfolio may potentially be its
undoing. This is exacerbated significantly by leverage, lack of
transparency, and products that are relatively illiquid, even when the
mortgage days were good.”
Notice how the worse case scenario is economic insolvency – as in less than ZERO!
Book Value, Schmook Value – How Marking to Market Will Break the Bear’s Back
… I can say that when I do watch it I hear a lot of perma-bulls
stating that this and that stock is cheap because it is trading at or
below its book value. They then go on to quote the historical
significance of this event, yada, yada, yada. This is then picked up by
a bunch of other individual investors, media pundits and other
“professionals,” and it appears that rampant buying ensues. I don’t
know how much of it is momentum trading versus actual investors really
believing they are buying on the fundamentals, but the buying pressure
is certainly there. They then lose their money as the stock they
thought was cheap, actually gets a lot cheaper, bringing their
investment down the crapper with it. What happened in this scenario?
These investors bought accounting numbers instead of true economic book
value. Anything outside of simple widget manufacturers are bound to
have some twists and turns to ascertain actual book value, actual
marketable book value that is. This is what the investor is interested
in, the ECONOMIC market value of book, not what the accounting ledger
says. After all, you are paying economic dollars to buy this book value
in the market, so you want to be able to ascertain marketable book
value, I hope it sounds simplistic, because the premise behind it is
quite simple – How much is this stuff really worth?. The implementation
may be a different matter, though. I set out to ascertain the true
book value of Bear Stearns, and the following is the path that I took.
From the London Business Times: Global
stock markets may have cheered the US Federal Reserve yesterday, but
on Wall Street the Fed’s unprecedented move to pump $280 billion (£140
billion) into global markets was seen as a sure sign that at least one
financial institution was struggling to survive. The name on most
people’s lips was Bear Stearns. [Hey, it pays to read the boombustblog.com. ...]
“The only reason the Fed would do this is if they knew one or more of
their primary dealers actually wasn’t flush with cash and needed funds
in a hurry,” Simon Maughan, an analyst with MF Global in London, said.
Bear Stearn’s new CEO states unequivocally that his balance sheet
hasn’t changed since November and that they have $17 billion of
cushion. [He did not outright say that they were in good shape though. My concern was looking forward. They are a significant counterparty risk (along with Morgan Stanley) and they have significant illiquid level 2 and 3 assets as a percentage of tangible equity. In addition, 17 billion is not much considering the leverage and amount of illiquid assets held by this bank.]
And what happens after the fact? Yes, I can turn bullish as well…
Joe Lewis on the Bear Stearns buyout Monday, March 17th, 2008: The
problem with the deal is that it is too low, and too favorable for
Morgan. It is literally guaranteed to drive angst from the other side.
Whenever you do a deal, you always make sure the other side gets to walk
away with something. If you don’t you always risk the deal falling
though unnecessarily. $2 is a slap in the face to employees who have
lost a life savings and have the power to block the deal. At the very
least, by the building at market price and get the company for free!
Web chatter on Lehman Brothers
Sunday, March 16th, 2008: It would appear that Lehman’s hedges are
paying off for them. The have the most CMBS and RMBS as a percent of
tangible equity on the street following BSC. The question is, “Can they monetize those hedges?”
I’m curious to see how the options on Lehman will be priced tomorrow.
I really don’t have enough. Goes to show you how stingy I am.
I bought them before Lehman was on anybody’s radar and I was still to
cheap to gorge. Now, all of the alarms have sounded and I’ll have to
pay up to participate or go in short. There is too much attention
focused on Lehman right now.
Even if the big Wall Street banks would lie to us, we have expert
analysts at hot shot, white shoe firms such as Goldman Sachs, who of
course not only are “Doing God’s Work” but also happen to be the
smartest of the smart and the “bestest” of the best, RIIIGHT!!!??? Below
we have both Erin from Lehman AND Goldmanlying on TV in a single screen shot. Ain’t a picture worth a thousand words???
But that damn blogger guy Reggie Middleton put his “put
parade”short combo on Lehman right about that time, and had all of these
additional negative things to say…
It appears that I should have dug deeper into Lehman! May 2008: I
never got a chance to perform a full forensic analysis of Lehman, but
did put a fair size short on them a few months back due to their “smoke
and mirrors” PR (oops), I mean financial reporting. There were just too
many inconsistencies, and too much exposure. I was familiar with the
game that some I banks play, for I did get a chance to do a deep dive on
Morgan Stanley, and did not like what I found. As usual, I am
significantly short those companies that I issue negative reports on, MS
and LEH included. I urge all who have an economic interest in these
companies to read through the PDF’s below and my MS updated report
linked later on in this post. In January, it was worth reviewing “Is this the Breaking of the Bear?”, for just two months later we all know what happened. I came across this speech
by David Eihorn and he has clearly delineated not only all of the
financial shenanigans that I mentioned in my blog, but a few more as
well. Very well articulated and researched.
So, who was right? The Ivy league, ivory tower boys doing God’s work or that blogger with the smart ass mouth from Brooklyn?
Please click the graph to enlarge to print quality size.
You can find the public version of my JPM quarterly opinion here. I will have an updated valuation complete with my foreclosure forecasts and "Fraudclosure" opinions for subscribers by Monday or Tuesday morning.
Well done Reggie on your CNBC appearance this morning. I admire your confidence to go on & dispense some truth for a change. You're among the handful of analysts like Meredith Whitney that give their opinions without waffling or waiver. Keep pressing forward with the truth!
Your consistent objectivity and independence got you where you are, Reggie. You don't need the MSM. If you get in bed with the Devil, sooner or later you're gonna have to fuck. Look at Erin Callan's eyes. You don't want eyes like that. Having said that, knock 'em dead. Looking forward to finding out if I should place JPM on my Conviction Dump (and I mean that) List.
I laugh when people say ben bernanke doesnt know what he is doing. he knows exactly what he is doing! Trying to destroy the US without people thinking he knows what he knows. same old same old. When will the people wake up. Go and listen to http://www.forecastfortomorrow.com guy. he knows his stuff and is very accurate.
I'm hearing that JPM could be short 150M oz of COMEX silver, and may have already lost over $900M during the past 60 days on a mark-to-market basis. Keep in mind this more than likely is just their COMEX short positions and not all of the other silver derivatives they have shorted.
I'm sure they have 150m oz sitting in the back shed. They wouldn't short without having the goods would they now. That would be manipulating the market.
Oh good, more black swans coming in to land.
Would suggest JPM and HSBC have a bad year ahead of them as a can't see gold making any substantial dive for a while yet, not while BB is printing and Japan, Europe etc..
Do what the politicians do ... answer their questions with the answers you have prepared for your questions. Then the line mysteriously drops and they switch to station break.
The fraud ridden MBS securitizations and REMICs were well known liabilities to all involved as they fabricated and then pushed the junk to their clients.
Now we know why bankers of all stripes had the urgency to get their bonuses ASAP and the obvious total use of the MSM as a tool to propagate "confined to subprime" false-flag operations and disinformation.
Swing for the fences Reggie. Your years of intellect, intellectual honesty, and common sense deserve the recognition.
Bullwinkle Moose (aka Uncle Sam) "Hey, Rocky...wanne see me pull a rabbit out of hat?"
Rocky (aka Wall Street) "Awwww, Bullwinkle...that trick 'll never work."
Bullwinkle Moose "Nothing up my sleeve...PRESTO! Wait a minute...this time fer sure!"
Don't tell me with FinReg AND with the war "Wall Street isn't going to ask for something in return." Lying? More like the proverbial "pound of flesh," right? I mean "don't they have it already?" (whatever happened with Goldman?) Or maybe you mean "that's just a start." In short "if they were too big to fail before, what are they now?"
Congrats on the teevee exposure. Be sure to post the clip here for all of us who don't watch that (excuse me) honkey jive channel.
And be sure to read that Branch Hill report, if you haven't already. They have similar opinions to yours that push-backs were set to explode even before the scandal over sloppy docs and backdated falsies.
Best wishes Reggie... but if you're going on CNBC to be mean to bankers, do it quickly 'cause I suspect they may "be up against a hard break" as soon as they figure you out.
Yes, it's "speak (quickly) and carry a big stick" my friend.
That's great...I really do need to get myself some ZH swag.
Reggie has been my most hoped for guest on CNBC for a while now - besides Marla appearing in hologram form and verbally slaughtering everyone on the set that is...
You have every right to crow a bit. Then again, aint nuthen to crow about since we are all screwed. Surely you know that better than i. Sorry about our luck
Is the foreclosure mess big enough to cause anyone to (publicly) flirt with insolvency.. is that where this analysis is going? TARPII and the whole shebang?
Hey, I'm just as hard on myself when I'm wrong - probably harder. It's just that it is much more profitable for me when I'm not wrong, so I try very hard not to be :-)
My server just went down with almost 2000 simultaneous requests. It appears that the web going public is anxious to see new media meet mainstream media.
Your not wrong and your timing looks just right... Last weeks "Rhino Horn" options expiration is the perfect cherry on top the mountain of debt, deceit and deception.
That's exactly what's happening, Reg. And NM has clearly established itself as source material these days. We still depend upon the MSM, however. But that's okay for now, imo.
Break a leg, man! Get your full due and nothing less.
In your analysis of JP Morgan I saw no mention of their Silver position and the fact it's costing them money instead of making them money. Granted it's small compared to their real estate mess ....
Thumbs up, Reggie.
Way to go, Reggie.
Just watched your interview..., good job! I would have soiled my britches.
Oh yea, I agree with your positions.
Agreed - excellent job, Reggie.
Good to see rational, critically thinking people get some props.
REGGIE'S 10/18 CNBC APPEARANCE HERE:
http://www.cnbc.com/id/15840232?video=1618325359&play=1
And for those that want to submit a comment to CNBC on the Middleton interview, go here:
https://register.cnbc.com/email/EmailSupport.jsp
Nice Reggie...
Concise and understandable. Did Erin insult you with her boyish charms for bringing reality into the discussion?
Or did you counter:
"Just the facts, boyish ma'am."
"China lead toy thing... How's that working for you?"
Well done Reggie on your CNBC appearance this morning. I admire your confidence to go on & dispense some truth for a change. You're among the handful of analysts like Meredith Whitney that give their opinions without waffling or waiver. Keep pressing forward with the truth!
Your consistent objectivity and independence got you where you are, Reggie. You don't need the MSM. If you get in bed with the Devil, sooner or later you're gonna have to fuck. Look at Erin Callan's eyes. You don't want eyes like that. Having said that, knock 'em dead. Looking forward to finding out if I should place JPM on my Conviction Dump (and I mean that) List.
I laugh when people say ben bernanke doesnt know what he is doing. he knows exactly what he is doing! Trying to destroy the US without people thinking he knows what he knows. same old same old. When will the people wake up. Go and listen to http://www.forecastfortomorrow.com guy. he knows his stuff and is very accurate.
If they pull 'ok, we'll have to leave it there'....there is always Dylan Ratigan next door. I'm looking forward to hearing you. Good luck.
I'm hearing that JPM could be short 150M oz of COMEX silver, and may have already lost over $900M during the past 60 days on a mark-to-market basis. Keep in mind this more than likely is just their COMEX short positions and not all of the other silver derivatives they have shorted.
Anyone else hearing this?
I'm sure they have 150m oz sitting in the back shed. They wouldn't short without having the goods would they now. That would be manipulating the market.
Oh good, more black swans coming in to land.
Would suggest JPM and HSBC have a bad year ahead of them as a can't see gold making any substantial dive for a while yet, not while BB is printing and Japan, Europe etc..
As a fellow Brooklynite (Church Avenue and Ocean Parkway/ PS 231) I would say the guy from Brooklyn.
Good luck Reggie, hope you get some questions which you really want to answer!!!!!
Do what the politicians do ... answer their questions with the answers you have prepared for your questions. Then the line mysteriously drops and they switch to station break.
*
The fraud ridden MBS securitizations and REMICs were well known liabilities to all involved as they fabricated and then pushed the junk to their clients.
Now we know why bankers of all stripes had the urgency to get their bonuses ASAP and the obvious total use of the MSM as a tool to propagate "confined to subprime" false-flag operations and disinformation.
Swing for the fences Reggie. Your years of intellect, intellectual honesty, and common sense deserve the recognition.
Bullwinkle Moose (aka Uncle Sam) "Hey, Rocky...wanne see me pull a rabbit out of hat?"
Rocky (aka Wall Street) "Awwww, Bullwinkle...that trick 'll never work."
Bullwinkle Moose "Nothing up my sleeve...PRESTO! Wait a minute...this time fer sure!"
Don't tell me with FinReg AND with the war "Wall Street isn't going to ask for something in return." Lying? More like the proverbial "pound of flesh," right? I mean "don't they have it already?" (whatever happened with Goldman?) Or maybe you mean "that's just a start." In short "if they were too big to fail before, what are they now?"
Congrats on the teevee exposure. Be sure to post the clip here for all of us who don't watch that (excuse me) honkey jive channel.
And be sure to read that Branch Hill report, if you haven't already. They have similar opinions to yours that push-backs were set to explode even before the scandal over sloppy docs and backdated falsies.
Best wishes Reggie... but if you're going on CNBC to be mean to bankers, do it quickly 'cause I suspect they may "be up against a hard break" as soon as they figure you out.
Yes, it's "speak (quickly) and carry a big stick" my friend.
Reggie on CNBC! I can't wait. I was just complaining about his high getin' it right/MSM exposure ratio too.
See if you can squeeeeeeze some props in for ZH Reggie (after your own site of course).
Haha, we gotta overnight Reggie one of these for his interview:
http://www.cafepress.com/zerohedge.419947812
Can't wait to see you on CNBS tomorrow Reggie. I let Bloomberg know I wanted to see more of you on there after your interview, will do the same here.
That's great...I really do need to get myself some ZH swag.
Reggie has been my most hoped for guest on CNBC for a while now - besides Marla appearing in hologram form and verbally slaughtering everyone on the set that is...
Are you saying my hopes are crazy? I can't help but imagine something more personal from her!
You have every right to crow a bit. Then again, aint nuthen to crow about since we are all screwed. Surely you know that better than i. Sorry about our luck
Give em hell Reggie
relax
stay on point
short concise thought packages
good luck!
Being gentlemanly to the ladies never hurts either...which should not be confused with taking shit from Erin Burnett.
Is the foreclosure mess big enough to cause anyone to (publicly) flirt with insolvency.. is that where this analysis is going? TARPII and the whole shebang?
Obama = Yes we can.
Obummer = No, we can't...
Reggie! Your modesty is just too cute.
Accuracy I won't quibble with. Gimme accuracy any day.
Hey, I'm just as hard on myself when I'm wrong - probably harder. It's just that it is much more profitable for me when I'm not wrong, so I try very hard not to be :-)
My server just went down with almost 2000 simultaneous requests. It appears that the web going public is anxious to see new media meet mainstream media.
good work reggie...if financial news shows were not run to support elite, but rather report, you would have your own show
have you ever been on Ratigan's show, and if not, why not.?
if you don't toot your own horn then nobody will hear you coming, Reggie. keep up the good work.
Reggie,
Your not wrong and your timing looks just right... Last weeks "Rhino Horn" options expiration is the perfect cherry on top the mountain of debt, deceit and deception.
Let the bust be revealed.
That's exactly what's happening, Reg. And NM has clearly established itself as source material these days. We still depend upon the MSM, however. But that's okay for now, imo.
Break a leg, man! Get your full due and nothing less.
Get yourself a Mac :)
He just needs to upgrade to that new fangled 486DX 33MHz with 2 MB RAM.
I for one will be watching. I'll even turn the volume up for your spot, something I only do for Santelli during working hours. :>
Those things were 4 thousand bucks in 93!
Nice... this should be entertaining!
Reggie,
In your analysis of JP Morgan I saw no mention of their Silver position and the fact it's costing them money instead of making them money. Granted it's small compared to their real estate mess ....
Maybe I missed it.