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Old 03-27-2008, 12:49 PM   #61
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it wasn't the liabilities that anyone cared about on the balance sheet, but the derivative book. a bear stearns BK would have hit every large bank worldwide
And Chase took all this on....

But in BK, they would handle this also... and as others have pointed out... if a BS BK would have 'crashed' the market like some think... then we have a heap of a lot of trouble....

I tend to think that the system would be able to handle it well...
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Old 03-27-2008, 01:09 PM   #62
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Our company leverage ratio is around 80. Same time, we tag our strategy as "conservative".
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Old 03-27-2008, 01:53 PM   #63
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it wasn't the liabilities that anyone cared about on the balance sheet, but the derivative book. a bear stearns BK would have hit every large bank worldwide
Not only banks, but a lot of other firms that were simply using derivatives to "hedge" real business risks.

In my simple way, I thought that the more firms invovled, the better off we would be. If there are a lot, than no single firm would see a big hit from a BS bankruptcy.
I understood that all prudent players diversify just so they can't be pulled under by on bad player.

But I'm interpreting Brewer's post to say that some of BS's creditors (I don't think it would be commercial banks, but I'm not sure) are so heavily leveraged that the safety in large numbers doesn't apply. Even though these leveraged firms have just a small percent of the total BS book, it still is enough to overwhelm their capital.

So I get -
Old thinking: Large number of creditors => safety,
New thinking: A few creditors with high leverage => a chain reaction that could get out of control.
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Old 03-27-2008, 02:10 PM   #64
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And Chase took all this on....

But in BK, they would handle this also... and as others have pointed out... if a BS BK would have 'crashed' the market like some think... then we have a heap of a lot of trouble....

I tend to think that the system would be able to handle it well...
I think Chase is only on the hook for the first $1B. The Fed is guaranteeing the next $29B. But it's not a "bailout!"
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Old 03-27-2008, 03:48 PM   #65
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I think Chase is only on the hook for the first $1B. The Fed is guaranteeing the next $29B. But it's not a "bailout!"
I guess a difference in what we read...

My reading.... The FED 'bought' $30 bill of securities and Chase is on the hook for the first $1 bill loss... the FED is on for the rest of only this portfolio...

BS has a LOT of derivatives that al_bundy mentioned... this Chase is on the hook for 100%... that is what I was talking about...
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Old 03-27-2008, 05:21 PM   #66
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I think Chase is only on the hook for the first $1B. The Fed is guaranteeing the next $29B. But it's not a "bailout!"
Chase? I thought JP took on the first $1B. Is that a typo or do I have it wrong?
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Old 03-27-2008, 06:13 PM   #67
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Chase? I thought JP took on the first $1B. Is that a typo or do I have it wrong?
It is JPMorganChase.... some call it JP, others call it Chase... depends on which one you know best...
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Old 03-27-2008, 06:20 PM   #68
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It is JPMorganChase.... some call it JP, others call it Chase... depends on which one you know best...
I forgot they were also Chase, thanks.
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Old 03-27-2008, 07:18 PM   #69
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Mr. Bear avails himself and the little woman of the opportunity to bail.

Bear Stearns' Cayne sells over $60M in stock - Mar. 27, 2008
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Old 03-28-2008, 09:07 AM   #70
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Of course, Mr Cayne had prudently diversified his personal investments before 2008.

"Since 2000, Cayne has sold 2.37 million shares worth about $182.7 million, while Schwartz has sold more than one million shares for roughly $67.2 million."

So he cashed out enough on the way up that the ride was definitely profitable for him. Yesterday's $61 million was a nice addition.

Bear Stearns execs sold some stock in December, data show - MarketWatch
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