Lehman, Merrill news

[Harriet]

Date: 9/17/2008 2:48:15 PM
Author: elle
Now that NEL mentioned about the insurance part of AIG, would policy holders be affected?

Harriet - Any opinions about the run at AIA (S''pore) since news broke? MAS assurances that every company has to have sufficient assets to cover the policies aren''t quite getting through. My family has decades of savings tied up in AIA policies...

Hi elle,
MAS is right. Unfortunately, some people will still panic.

 

[TravelingGal]

Date: 9/17/2008 1:42:58 PM
Author: Dancing Fire
i have nothing aganist short sellers like TG,in fact i do sell short from time to time,but most of my holding are in long position.

Hey. Hey! Aren''t I TG? Or am I just TGal? Are we about to have another DF/DF confusion of identities?

Anyhoo, I am not sure how I feel about this. I feel sorry for all who are affected (as I said, I have had friends directly affected) but man, it seems to be that we''re delaying the inevitable with a lot of this stuff. However, I am no economist.

 

[miraclesrule]

Well, I''m an insurance risk manager and the fact that AIG is the worlds largest insurer and is in big trouble, it is no surprise to me that the government...errr the people....would be forced to bail them out. What I don''t understand is why we should bail them out at all. We all take risks and then have to live with the consequences. Unless we want to bail out everyone who is in trouble...which is a huge amount of people right now...then we should bail out nobody...especially the mortgage bankers.

You know, it''s interesting that I get the option of watching rerun after rerun of "Predators" on the "news channel" and see the the same slimy sexual predators on tv over and over again. Why don''t they fill some of that rotation time with "Predator" shows on unsuspecting borrowers who thought they were going to get to live the American dream only to find out that they would be foreclosed upon, or have to short sell and be straddled with a debt that is a large as traditional down payment.

Our economy is making a few industries really rich, at the expense of others. But gawd forbid we ever mention robbing Peter to pay Paul We are robbing Paul to pay Peter. It''s ca-razy.....

 

[TravelingGal]

I''d like to rob Paul and Peter to buy myself a decent starter home in LA. Think I could snap up Paul and Pete''s home when it forecloses?

 

[Dancing Fire]

Date: 9/17/2008 11:44:34 AM
Author: Harriet
Crown 1,

Assume that a stock is trading at $100. Assume also that you decide to borrow 1 unit to short-sell. Let''s say the stock falls to $50 and you want to close out your position. Because you have to replace that 1 unit at only $50, you would have made $50.

or with my luck......i short the stock at $100 then the stock goes to $150 i get a margin call from my broker. believe me that ain''t fun either

been there many times

 

[Dancing Fire]

Date: 9/18/2008 12:04:10 AM
Author: TravelingGal

Date: 9/17/2008 1:42:58 PM
Author: Dancing Fire
i have nothing aganist short sellers like TG,in fact i do sell short from time to time,but most of my holding are in long position.

Hey. Hey! Aren''t I TG? Or am I just TGal? Are we about to have another DF/DF confusion of identities?

nahhh...i ain''t confuse.your my Korean GF

 

[elle]

Thanks FDL and Harriet! That''s good to know.

 

[beau13]

Wow..what is going on over in the US? Headed for a depression? My brother in law works for Morgan Stanley in NY..he seems very concerned! This is how the depression started way back..the stock market crashed..people were afraid and withdrew their money. What''s going on is very surprising, and alarming actually. I know we lost thousands (over 20) yesterday in stocks!

 

[beau13]

Date: 9/15/2008 4:00:00 PM
Author:Sizzle
Does this directly affect anyone here on Pricescope? I am VERY afraid where our economy is headed.

Unfortunately the American Economy affects everyone to some degree..even us here in Canada, will eventually be affected with the craziness going on over there!

 

[beau13]

Date: 9/17/2008 8:46:01 AM
Author: Harriet
crown 1,
With all due respect, the other ladies and I are taking umbrage to what we (though not you) interpret as tradergirl''s gloating because of her history of tooting her own horn.

Um..can we kinda stay on topic here..the economy?

 

[arjunajane]

Date: 9/18/2008 6:07:42 AM
Author: beau13

Date: 9/15/2008 4:00:00 PM
Author:Sizzle
Does this directly affect anyone here on Pricescope? I am VERY afraid where our economy is headed.

Unfortunately the American Economy affects everyone to some degree..even us here in Canada, will eventually be affected with the craziness going on over there!

Yep, and more far reaching than that. About 2 million Australians have their superannuation linked to AIG, so was a stressful couple days for them too.

 

[ksinger]

Ah but deregulation is savior of us all!! Long live globalization!! The financialization of our economy!! Bless the repeal of the last vestiges of Glass-Steagall!! The economy is fundamentally sound!!

I find all this ironically amusing (in a very bleak sort of way) since I live but a few scant miles from the original location of Penn Square Bank.....anyone...anyone? The whole American economy is now Penn Square Bank writ large...

 

[crown1]

Date: 9/18/2008 7:07:51 AM
Author: ksinger
Ah but deregulation is savior of us all!! Long live globalization!! The financialization of our economy!! Bless the repeal of the last vestiges of Glass-Steagall!! The economy is fundamentally sound!!

I find all this ironically amusing (in a very bleak sort of way) since I live but a few scant miles from the original location of Penn Square Bank.....anyone...anyone? The whole American economy is now Penn Square Bank writ large...

i did not know of which you spoke. did some googling. while america was sleeping. i hope we wake up and smell the coffee. i am not involved in the economic sector and only knew that i was unhappy with the way americans were handling their finances. i am of the old school work for a living and live within your means. i did not know about these acts and their repeal. thanks!

 

[elle_chris]

Date: 9/18/2008 12:06:56 AM
Author: miraclesrule
Well, I''m an insurance risk manager and the fact that AIG is the worlds largest insurer and is in big trouble, it is no surprise to me that the government...errr the people....would be forced to bail them out. What I don''t understand is why we should bail them out at all. We all take risks and then have to live with the consequences. Unless we want to bail out everyone who is in trouble...which is a huge amount of people right now...then we should bail out nobody...especially the mortgage bankers.

You know, it''s interesting that I get the option of watching rerun after rerun of ''Predators'' on the ''news channel'' and see the the same slimy sexual predators on tv over and over again. Why don''t they fill some of that rotation time with ''Predator'' shows on unsuspecting borrowers who thought they were going to get to live the American dream only to find out that they would be foreclosed upon, or have to short sell and be straddled with a debt that is a large as traditional down payment.

Our economy is making a few industries really rich, at the expense of others. But gawd forbid we ever mention robbing Peter to pay Paul We are robbing Paul to pay Peter. It''s ca-razy.....

I understand what you''re saying and agree to a point.
There are some instances however when I don''t mind the goverment "bailing" companies out.

What''s currently happening isn''t only affecting the people who work/worked at these companies. It''s a downward spiral that affects everyone in the vicinty. Not just the investors. For example, the taxes that the city and state just lost (and it''s estimated at 20% for ny state) is going to affect city and statewide services for people who need it. The jobs created outside of the financial sector such as nannies/babysitters, the morning coffee guy, to the guys that shine shoes are all going to be effected.
I read somehwere, think it was the times, that for every "wall st." job, two more get created. If I look around me, I believe it''s even more. The end result is not pretty. Unemployment goes up, city/state revenue goes down, the blue collar guys are going to be hit harder in many ways than the finance guys.
So for those reasons alone, I''m glad the goverment stepped in on this occasion.

 

[diamondsrock]

I am starting to see how scary these times really are right now. The housing boom, for me, just made no sense. People buying homes with no down payment was crazy. What were the banks thinking? One downturn in the market and those people were already upside down on their mortgage. They were banking on prices going up and up forever which was just not a reasonable assumption. 20% down wasn''t such a bad idea after all when buying a home. Even so, people used their equity like a bank and just kept making withdraws, which was not smart. It should be there for emergencies or home repairs, not vacations and flat screen tv''s. I have seen several people personally do that, and I''lll admit, I was envious of their lifestyle, even though I knew it wasn''t prudent. Not judging them, just saying it wasn''t a smart financial move. Some people just don''t understand finances I guess to know what they are doing. Or maybe they just wanted to live above their means (don''t we all want to???) As modest as my lifestyle is, I am still kicking myself for not trying to save more the past year or two. I am thinking of making cutbacks in my budget if I can. Price of oil alone this winter will be brutal here in New England where many use oil to heat their homes.

I don''t have a lot, but do have a mutual fund invested in stocks, and have lost enough of that to be nervous. Plus I''m sure my 401K is down, but haven''t looked at those numbers. But, I don''t want to pull it out now at the downturn. Very nervewrackling. Especially since I am hunting for a new job right now so this isn''t the best market for that either.

 

[Harriet]

Date: 9/18/2008 6:13:58 AM
Author: beau13

Date: 9/17/2008 8:46:01 AM
Author: Harriet
crown 1,
With all due respect, the other ladies and I are taking umbrage to what we (though not you) interpret as tradergirl''s gloating because of her history of tooting her own horn.

Um..can we kinda stay on topic here..the economy?

If you look at p.3, Ali has already asked us to do so.

 

[Harriet]

Elle,
You''re welcome.

Diamondsrock,
Best of luck on your job search!

 

[AGBF]

Date: 9/18/2008 9:01:30 AM
Author: crown1

i am of the old school work for a living and live within your means.

My husband is the financially savvy one in our marriage, but I always (until recently) kept some money for my daughter's education in an old-fashioned bank because it was FDIC insured. (My husband laughed at me for this.)

I know that my great-grandparents would have kept the cash in a bag hidden behind the radiator, but since it is under $100,000 and there is now (post FDR) an FDIC, I feel banks are just as secure-maybe more secure-than a bag of cash in the house.

Unfortunately, I put all the money into one of the state college funds, which is like an IRA. Supposedly it is to be invested in increasingly conservative funds as the child nears college age. It is still tied to the stock market, however. I know that my husband's and my IRA's have lost value (although I do not look at them). I am afraid to look at the college savings fund. I am afraid that perhaps even some of the principal I put in may have been wiped out. That may not be true, but I wasn't looking for a get rich quick scheme. All I wanted to do was to save money for her college expenses. The funds advertised by the states were made to sound very safe. I hope that at least the money I put in is not lost!


Deborah

 

[AGBF]

Below are excerpts from an article in today's, "The New York Times" on mutual funds and the increasing risk of investing in them.



"Money market funds have been among the few places that investors could put their cash and sleep peacefully.

At the moment, that is not necessarily true.

On Tuesday, the Reserve Primary Fund, a giant money market fund whose parent helped invent that investment, said its customers would lose money. Instead of each share being worth a dollar for every dollar invested, it said its customers’ shares were worth only 97 cents. In Wall Street parlance, it 'broke the buck,' a rare occurrence.

So far, it appears that no other money market funds have fallen below a dollar a share. And other money market managers have hastened to reassure investors that their money is safe. But the Primary Fund’s announcement did raise this question: What, in today’s world, is truly safe?

After all, the Primary Fund’s troubles did not occur in isolation. They followed the disappearance of both Lehman Brothers and Merrill Lynch, not to mention the government bailouts of the mortgage finance giants Fannie Mae and Freddie Mac and the insurance company American International Group. And if you haven’t already forgotten, there was the failure of the California thrift IndyMac in July.

And that’s why, in this market, financial advisers agreed on Wednesday, consumers need to become their own chief investment officers, even when it comes to something as simple as finding a place to put their cash.

'One by one, all of my safe havens aren’t so safe anymore, and that’s a bad thing,' said Matthew Tuttle, a certified financial planner and president of Tuttle Wealth Management in Stamford, Conn.

'It used to be O.K. to have money in a CD, but now you have to worry, "Is my bank going to go under?" ' he added. 'You used to be able to buy a guaranteed annuity from an insurance company, but now you have to worry, "Is my insurance company going to go under?" Or, you can have auction-rate preferred securities, but now there is no market.'"

Deborah

 

[MichelleCarmen]

Date: 9/18/2008 1:02:49 PM
Author: AGBF

My husband is the financially savvy one in our marriage, but I always (until recently) kept some money for my daughter''s education in an old-fashioned bank because it was FDIC insured. (My husband laughed at me for this.)

I''m not savvy at all and wonder if sticking some cash in a safe deposit box is a good idea. My dh thinks I''m crazy to to that but wouldn''t THAT be safe even if my bank did go under?

There is no possible way the FDIC could have problems covering all these deposits, right? How long can they protect us. Those are probably really unjustifiable concerns and I''d just like to be reassured.

 

[starsapphire]

Looks like Morgan Stanley is having some issues too. I used to work there as a temp, and they have been preparing for this crisis for a few years.

 

[Dancing Fire]

Date: 9/18/2008 9:52:09 AM
Author: diamondsrock
I am starting to see how scary these times really are right now. The housing boom, for me, just made no sense. People buying homes with no down payment was crazy. What were the banks thinking? One downturn in the market and those people were already upside down on their mortgage. They were banking on prices going up and up forever which was just not a reasonable assumption. 20% down wasn''t such a bad idea after all when buying a home. Even so, people used their equity like a bank and just kept making withdraws, which was not smart. It should be there for emergencies or home repairs, not vacations and flat screen tv''s. I have seen several people personally do that, and I''lll admit, I was envious of their lifestyle, even though I knew it wasn''t prudent. Not judging them, just saying it wasn''t a smart financial move. Some people just don''t understand finances I guess to know what they are doing. Or maybe they just wanted to live above their means (don''t we all want to???) As modest as my lifestyle is, I am still kicking myself for not trying to save more the past year or two. I am thinking of making cutbacks in my budget if I can. Price of oil alone this winter will be brutal here in New England where many use oil to heat their homes.

I don''t have a lot, but do have a mutual fund invested in stocks, and have lost enough of that to be nervous. Plus I''m sure my 401K is down, but haven''t looked at those numbers. But, I don''t want to pull it out now at the downturn. Very nervewrackling. Especially since I am hunting for a new job right now so this isn''t the best market for that either.

banks and the buyers...now both sides are paying dearly for their mistakes.

i always say there should be a 20% down payment rule for buying a home.

 

[Dancing Fire]

Date: 9/18/2008 1:31:26 PM
Author: MC

Date: 9/18/2008 1:02:49 PM
Author: AGBF

My husband is the financially savvy one in our marriage, but I always (until recently) kept some money for my daughter''s education in an old-fashioned bank because it was FDIC insured. (My husband laughed at me for this.)

I''m not savvy at all and wonder if sticking some cash in a safe deposit box is a good idea. My dh thinks I''m crazy to to that but wouldn''t THAT be safe even if my bank did go under?

There is no possible way the FDIC could have problems covering all these deposits, right? How long can they protect us. Those are probably really unjustifiable concerns and I''d just like to be reassured.

not a good idea,inflation will kill ya as time goes by. buy physical gold and put it in your safe depoist box or buy GLD on the NYSE.

 

[Beacon]

We''re going to get over this one. Don''t put the cash in the safe box.

 

[dragonfly411]

DF I have to disagree here. This would make it virtually impossible for a lower income starting out couple to get a home. And in today''s market, renting is more than a mortgage payment! *at least near me*

 

[Dancing Fire]

Date: 9/18/2008 3:26:19 PM
Author: dragonfly411
DF I have to disagree here. This would make it virtually impossible for a lower income starting out couple to get a home. And in today''s market, renting is more than a mortgage payment! *at least near me*

if not 20% then how about 15% dp? remember, no dp buyers was the reason for this financial mess.

 

[Beacon]

Downpayment does not matter. Pricing risk correctly matters. The fallout of this market was caused by the mispricing of risk.

Many properties are down more than 20% anyway, so 20% downpayment is already gone.

Think about credit card purchases: zero downpayment. Yah, the interest rate is a little bit different than a home loan. Risk is priced in.

Too much liquidity resulted in failure to acknowledge risk.

 

[MichelleCarmen]

Date: 9/18/2008 3:26:19 PM
Author: dragonfly411
DF I have to disagree here. This would make it virtually impossible for a lower income starting out couple to get a home. And in today's market, renting is more than a mortgage payment! *at least near me*

I would speculate that point is that a "lower-income starting out couple" shouldn't buy a home until they have saved up. . .going back to days when people saved and saved until they would be able to afford a home (that is before the crazy housing prices, of course). If renting is very expensive, then an option would be to move out away from the higher priced locations and commute into work (by bus???) and set aside a portion of income per month.

As Beacon said, many houses have lost 20 or more percent value, leaving many who put that money down screwed and needing to sell their housee and forced into short-selling. My neighbor is a realtor and she's taken classes on short-selling and is always talking about highly stressful sales she's encountering.

 

[ChargerGrrl]

Date: 9/18/2008 3:20:38 PM
Author: Dancing Fire

Date: 9/18/2008 1:31:26 PM
Author: MC

Date: 9/18/2008 1:02:49 PM
Author: AGBF

My husband is the financially savvy one in our marriage, but I always (until recently) kept some money for my daughter''s education in an old-fashioned bank because it was FDIC insured. (My husband laughed at me for this.)

I''m not savvy at all and wonder if sticking some cash in a safe deposit box is a good idea. My dh thinks I''m crazy to to that but wouldn''t THAT be safe even if my bank did go under?

There is no possible way the FDIC could have problems covering all these deposits, right? How long can they protect us. Those are probably really unjustifiable concerns and I''d just like to be reassured.

not a good idea,inflation will kill ya as time goes by. buy physical gold and put it in your safe depoist box or buy GLD on the NYSE.

I''m not THAT financially savvy, but I always thought/heard that "safer" investments like treasuries and gold tend to shoot up in cost due to the high demand brought on by the"panic selling" of liquidating stocks to move to these investments. And therefore should be avoided.

I don''t even want to know what happened to my 401k this week, but my investment strategy has always been to be in it for the long-haul. Times like these are not uncommon to stock investors. They''ve occurred several times in history and eventually the markets were able to work through these periods and produce positive returns.

Talk to me in 25 years when i''m ready for retirement and i''ll have a different strategy!

 

[dragonfly411]

In our area, including the entire county (in and outside of town) you can expect to pay well over 800 a month even for a single bedroom flat in the worst part of town. Outside of town prices go up. Where would you suggest a lower income couple live as they are saving and saving and saving? At home with the parents?? Most parents would not allow this, and if living prices are that high for an apartment, then how is that lower income couple going to manage saving ANYTHING towards a future house? BTW living outside of the city and commuting by bus is not an option here, in city yes, but even then.... that 800 doesn''t include any utilities or furnishing of any kind mind you. Again that is a single bedroom run down flat apartment in the cringing side of town....