[Niagara]

The stock market is one gigantic scam, orchestrated by Wall Street crooks.

Sometimes they get exposed though. Like when New York’s Attorney General Eliot Spitzer, uncovered this fraud by Merrill Lynch

This article explains how some of these scams work...

[Zardoz]

Why the private equity bubble is bursting

$this->bbcode_second_pass_quote('', 'I')t's looking more and more as if the private equity phenomenon was a classic Wall Street bubble. It brought unprecedented riches to investment banks, minted a flashy new generation of billionaire Masters of the Universe, and bestowed a magical aura on leveraged-buyout specialists like Carlyle and Kohlberg Kravis Roberts. And now the bubble's bursting. Loans will go bad, deals will be canceled, fortunes will be lost. We're witnessing the unwinding of the whole dynamic that propelled the stock market (not to mention Manhattan real estate prices) to record highs.

[Eli]

Here is a good one about that class act that is Bear Sterns the upstanding stalwarts of the US finance industry.

Those two hedge funds that they just declared BK on, they did that in the Cayman Islands.



Bloomberg

What a class act, invest with us and we will declare BK in the Caymans to insure that you get absolutely none of your investment back.

Bear Sterns, we like to do all are business deals in the same at the same place as drug lords and pirates.

[PenultimateManStanding]

Why the private equity bubble is bursting

Interesting article. Sometimes though these sorts of issues baffle me:

$this->bbcode_second_pass_quote('', 'T')he same leverage that magnified their returns will multiply their losses, with potentially dire effects. Here's what the worst-case scenario might look like: As the hedge funds get margin calls from Wall Street, they're forced to dump their holdings of loans and bonds to raise cash. The glut of distressed debt for sale crashes prices and pushes yields to towering levels. Then everyone holding high-yield debt, from Asian banks to small investors with money in junk-bond mutual funds, will take a horrendous pounding.

[Zardoz]

As expected, the Fed did nothing:

Fed Keeps Rate at 5.25%; Says Inflation Is Still Main Concern

$this->bbcode_second_pass_quote('', 'T')he Federal Reserve, keeping interest rates unchanged, said inflation is still the biggest danger to the economy while acknowledging that the economy may weaken.

"Although the downside risks to growth have increased somewhat, the committee's predominant policy concern remains the risk that inflation will fail to moderate as expected,'' the Federal Open Market Committee said today after meeting in Washington, where it left the benchmark rate at 5.25 percent.

Policy makers took account of threats to the economy's expansion while stopping short of saying risks are balanced between inflation and slower growth. Chairman Ben S. Bernanke and his team extended the longest freeze in borrowing costs in nine years, waiting to see how the decline in stocks and corporate bonds in the past three weeks plays out.

[PenultimateManStanding]

Now see what you've done, Zardoz. I have to start reading wiki articles about things like private equity funds to try and educate myself about all this stuff. That article you posted above mixed up a lot of different issues and left me wondering and a little doubtful. I don't like to be in the dark: just was all that about buying debt on margin, towering yields and all the rest of it?

[Eli]

Here is a little something the Chinese are threatening if the US goes through with sanctions.


I give you a hint what they are threatening.



Nuclear option

Just to be clear the mere fact that they are talking about this is not good. Calling this the nuclear option is not an overstatement.

[oswald622]

Jerome a Paris weighs in:

http://www.dailykos.com/story/2007/8/7/162053/1405

[Roccland]

[Benzin]

What does it matter anyways? People who are in over their head with debt have reaped what they sowed. For those of us who actually live WITHIN our means, might as well enjoy the oil party as long as possible. After that, it's anyone's guess.

The party is still on... for now.

[Eli]

Well the reason everyone should care is because there will be no hiding from the fall out of this debt bubble.

Want a reason to care? read the article about China's nuclear option.

The Chinese now have the power to destroy us, I think everyone would care if a loaf of bread cost 50 bucks. China can bring that about.

[Benzin]

I'm not saying people shouldn't care. What I am saying is these things are out of our control and whatever happens will happen.

China has the US by the gonads, no doubt there. If it wants to exercise a nuclear option then it's curtains for all. No way around that.

[Eli]

Yeah but if we didn't talk about it all there would be left to do is to go off and build a bunker but even that is in vain. I think it is important to talk about what is coming, get the fear and panic out of the way early and beat the rush.


$this->bbcode_second_pass_quote('', 'E')cclesiastes 2:11 Then I looked on all the works that my hands had wrought, and on the labour that I had laboured to do: and, behold, all was vanity and vexation of spirit, and there was no profit under the sun.
And I turned myself to behold wisdom, and madness, and folly: for what can the man do that cometh after the king? even that which hath been already done.
13 Then I saw that wisdom excelleth folly, as far as light excelleth darkness.
14 The wise man’s eyes are in his head; but the fool walketh in darkness: and I myself perceived also that one event happeneth to them all.
15 Then said I in my heart, As it happeneth to the fool, so it happeneth even to me; and why was I then more wise? Then I said in my heart, that this also is vanity.
16 For there is no remembrance of the wise more than of the fool for ever; seeing that which now is in the days to come shall all be forgotten. And how dieth the wise man? as the fool.

[OilIsMastery]

I would like to personally thank everyone who panicked over the past three days. Couldn't have done it without you guys. Thanks a million.

[gnm]

is that you, BIGG?

-G

[Zardoz]

Dang that harsh reality:

U.S., European Stocks Tumble on Credit Concerns; Banks Retreat

$this->bbcode_second_pass_quote('', 'U').S. stocks followed European markets lower after losses tied to subprime mortgages spread through credit markets, threatening earnings at banks and brokerages.

Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. led declines in financial companies after BNP Paribas SA, France's biggest bank, halted withdrawals from funds that owned subprime loans because it can't value the holdings. Home Depot Inc., the largest home-improvement chain, fell the most in a year after saying the $10.3 billion purchase price for its contractors' unit may be cut as investors shun riskier debt...

..."It looks hideous out there,'' said John Wilson, co- director of equity strategy at Morgan Keegan & Co., which oversees $20 billion in Memphis, Tennessee. "The fear is obviously not that BNP Paribas has a problem, but that it's much more widespread.''

[oswald622]

$this->bbcode_second_pass_quote('Zardoz', '[')url=http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vNfokGAgrxZA.asf]"Every day the news is getting worse, and it's growing at amazing speed...Almost three or four funds a day are having trouble."[/url]

[TheTurtle]

$this->bbcode_second_pass_quote('gnm', 'i')s that you, BIGG?

[Eli]

Ok there is nothing to worry about Japan just dumped a trillion yen into the market to shore up liquidity just like the ECB this morning.

That is 8 billion US dollars.

Repeat after me this is contained, this is contained.

[lawnchair]

$this->bbcode_second_pass_quote('Eli', 'O')k there is nothing to worry about Japan just dumped a trillion yen into the market to shore up liquidity just like the ECB this morning.