Fear and loathing in the financial market

[Guest guest]

Dear friends,

 

Bear Sterns bank has been bought by JP Morgan. What emerges from the

deal is that one of the largest investment banks in the US has been

found to be worth only a fraction of its listed value on the stock

exchange (around 6% of its listed value on Friday and 3% of the value

on Thursday). In other words, the investors in this bank are losing

most of the wealth they had in the bank. This is an enormously

adverse development for the banking community and may have

ramifications for the financial system and economy as a whole. The

Federal Reserve is backing the deal and acting as lender of last

resort. Yesterday, on a Sunday, the Fed also lowered the discount

rate (its policy rate) by 0.25%, to 3.25%. It is clear the Fed is now

struggling to prevent a meltdown of the US financial system. As a

result, it is likely this development will spook the finanacial

markets further. We will soon see.

 

The

 

Best wishes,

 

Thor

 

JPMorgan Chase to buy Bear Stearns

 

Story Highlights

* Acquisition values Bear Stearns shares at $2; Shares closed Friday

at $30

* U.S. Fed providing financing for up to $30 billion in Bear Stearns

assets

* Bear Stearns was facing " run on the bank " on Friday

* Deal, if approved by shareholders, will close in June

 

NEW YORK (CNNMoney.com) -- JPMorgan Chase & Co. said Sunday that it

is buying troubled Wall Street firm Bear Stearns, amid deepening

fears that Bear's demise could have sent shockwaves across already

shaky financial markets.

 

The deal to buy Bear Stearns is worth an estimated $236 million.

 

The deal values Bear Stearns at $236 million, or just $2 a share.

Shares had closed at $30 on Friday, down 47 percent that day.

 

" Effective immediately, JPMorgan Chase is guaranteeing the trading

obligations of Bear Stearns and its subsidiaries and is providing

management oversight for its operations, " said a statement released

Sunday by JPMorgan.

 

Shareholders must approve the deal, which is expected to close by the

end of June.

 

JPMorgan is taking immediate responsibility for Bear's trading

obligations and assuming " management oversight " of the firm's

operations. The deal has already been approved by the Federal Reserve

and other regulators, according to the statement.

 

The Fed is providing special emergency financing for up to $30

billion in Bear Stearns assets.

 

" JPMorgan stands behind Bear Stearns, " said Jamie Dimon, chairman and

chief executive of JPMorgan. " Bear Stearns clients and counterparties

should feel secure that JPMorgan is guaranteeing ... risk, " he

continued.

 

The fast-track deal is expected to close by the end of June, the

statement said.

 

U.S. Treasury chief remains upbeat

CNN/Money: Fed acts on credit crisis

Paulson defends Bear Sterns rescue

CNN/Money: Bear's China bank deal in question

Bear Stearns was on the brink of financial collapse Friday when

JPMorgan and the Federal Reserve Bank of New York said they would

provide the brokerage a short-term loan.

 

Bear was dealing with a classic " run on the bank. " The firm's short-

term creditors refused to lend the firm any more money and

simultaneously demanded repayment of outstanding debt.

 

The one-two punch overwhelmed Bear's cash position.

 

With the global credit crisis worsening, the Fed -- along with

officials from the Treasury Department and other government agencies -

- took the dramatic action to prevent the investment bank from going

under and igniting widespread panic through the financial markets.

Watch a discussion on the impact on global markets »

 

Treasury Secretary Henry Paulson said on Sunday that talks about how

to rescue Bear had continued throughout the weekend. He defended the

Fed's bailout on Friday as " the right decision " and said the Bush

administration was ready to take other actions to bring stability to

the financial markets.

 

He would not say what might have happened had the government failed

to step in.

 

" I'm not going to speculate about what-ifs, " he said. " I'm just going

to say our clear priority right now -- our number one priority,

everything we're doing in the economic arena -- is to minimize

instability, minimize spillover into the real economy. "

 

Bear Stearns has approximately 14,000 employees worldwide.

 

The deal marks an inglorious chapter for 85-year-old Bear Stearns, a

storied Wall Street firm whose unraveling has been fast and furious.

 

Rumors that Bear Stearns was on the verge of collapse started buzzing

around Wall Street trading desks last Monday. Chief Executive Alan

Schwartz -- who took over as CEO in early January from longtime chief

Jimmy Cayne -- appeared on television on Wednesday afternoon to

reassure the markets that the firm was stable.

 

But by Thursday night, Bear was in a severe crunch. Some firms that

trade with it effectively stopped offering it credit because they

feared that Bear was running short of short-term funding, or

liquidity.

 

" The past week has been an incredibly difficult time for Bear

Stearns, " said Alan Schwartz, president and CEO of Bear

Stearns. " This transaction represents the best outcome for all of our

constituencies based upon the current circumstances. "

 

White House spokesman Tony Fratto told CNN on Sunday that Paulson has

briefed President Bush on the Federal Reserve's role in helping to

facilitate the purchase.

 

" We appreciate the actions taken by the Federal Reserve this

evening, " said Fratto. " Secretary Paulson and Chairman Bernanke are

actively engaged in addressing issues affecting our financial

markets. Secretary Paulson has kept the President briefed on recent

developments. "

 

Shares of Bear Stearns opened last week at $69.75 and traded as high

as $159 last year.

 

------------------

Fed Lowers Discount Rate, Expands Lending to Prevent Meltdown

 

By Scott Lanman and Craig Torres

 

March 17 (Bloomberg) -- The Federal Reserve, struggling to prevent a

meltdown in financial markets, cut the rate on direct loans to banks

and became lender of last resort to the biggest dealers in U.S.

government bonds.

 

In its first weekend emergency action in almost three decades, the

central bank lowered the so-called discount rate by a quarter of a

percentage point to 3.25 percent. The Fed also will lend to the 20

firms that buy Treasury securities directly from it. In a further

step, the Fed will provide up to $30 billion to JPMorgan Chase & Co.

to help it finance the purchase of Bear Stearns Cos. after a run on

Wall Street's fifth-largest securities firm.

 

 

SAMVA , " SIHA " <vkchoudhry wrote:

>

>

> Hello Mr. Park,

>

> The expression foolishness used by you appears to be right in the

background of managing marketing of surplus services/goods without

proper evaluating the risks by the loss making banks/organisations.

>

> Best wishes.

>

>

>

>

>

> -

> jacks

> SAMVA

> Sunday, March 16, 2008 10:01 AM

> Re: Further thoughts on the Jupiter sub-period

in the SAMVA USA chart

>

>

>

> Thanks for all the work filling out astrologically what was seen

by me and many others from the perspective of concerned

citzens...that the subprime crisis was not a 'slam-dunk' event but

the beginning of major problems for the US economic and political

system. And that resolving these problems created by foolishness and

fraud would be years long. That the US might look different at the

ending of these events...seems assured. 'A fool if he persists in his

foolishness, will become wise,' is the hope here.

>

> Thanks again. Reading all your articles and charts...great

learning experience. Don Park

> -

> Cosmologer

> samva

> Saturday, March 15, 2008 4:29 AM

> Further thoughts on the Jupiter sub-period in

the SAMVA USA chart

>

>

> Dear friends,

>

> It is interesting to see the two graphs (attached) which show

>

> a. the Dow Jones Index of stock market prices

> b. the intra-day volatility in the stock market (the difference

between the high and low value in the trading day)

>

> From a. we can see

> - the drop in the stock market in late February 2007 when the

housing market situation in the USA came to prominence and the first

concerns were expressed by oppinion makers that the risk of a

recession was increasing

> - the drop in late July 2007 when the first banks began to

report losses

> - the drop from late October 2007 and into January 2008 when

concerns increased about higher oil prices, profits of US banks and a

recession in the USA became more widespread

>

> Since the peak of the market in the second half of 2007, share

prices have become more volatile with the movement primarily down.

>

> From b. we can see clearly that the uncertainty in the market

is increasing. The drop in the stock market is linked to increased

intra-day volatility. This shows that investors become less sure what

to expect at any given time. After decreasing recently, the intrad-

day volatility has recently increased again. Interestingly, since

early 2007, the volatility has increased such that the lows now are

higher then the highs before mid 2007. Clearly, the market

participants are showing that they think the risk of a recession and

overall uncertainty are greater at this time than before.

>

> What explains this shift to more financial market volatility

since 2007 as seen in the SAMVA USA chart?

>

> First of all we need to keep the sub-period in mind. The Venus -

Jupiter period began in June 2006. This put an emphasis on all

things having to do with Jupiter in the chart.

>

> - JUPITER, as 6TH LORD, is the functional indicator of FIANCIAL

STABILITY (the manageability of debts), CONFLICT (war or activity of

the courts) and HEALTH (the health system or diseases).

> - JUPITER is also a general indicator of GROWTH, RELIGION (or

eclesiastic matters), JUDICIARY (judges) and FINANCIAL INSTITUTIONS

(including banks).

> - JUPITER is placed in the 5th house, which rules FINANCIAL

SPECULATION, HIGHER LEARNING, OFF-SPRING, CREATIVITY and MANAGEMENT.

> - JUPITER aspects natal 1ST LORD MOON in the 11TH HOUSE of

INCOME and ASPIRATIONS (hopes, goals or wishes) in the chart

explaining disruptions to efforts to obtain income, a religious

impulse of the nation as well as its war like nature such that the

nation rarely backs down from a challenge. On other words, the

functional and general energy of Jupiter is strongly felt with

respect to the MOON, which governs the self of the country.

> - JUPITER is close to being conjunct the strong 10TH LORD MARS,

and in addtion to the mutual aspect of MOON and MARS, this influences

the MILITARY PROWESS, COURAGE and the famed TECHNICAL KNOW-HOW of

Americans.

> - RAHU in the 10TH HOUSE aspects the 6TH HOUSE of the chart,

bringing periodic CRISES to financial stability and other indications

of the 6TH HOUSE in the country

> - VENUS as 4TH LORD of REAL ESTATE, COMMUNAL HARMONY (social

harmony), EDUCATION and MAJOR INCLINATIONS, is placed in the 6TH

HOUSE, showing the IMPORTANCE OF HOUSING and its INVOLVEMENT with

FINANCIAL STABILITY in the country. It also shows how profoundly 6TH

HOUSE PROBLEMS or SETBACKS disturb the PSYCHE OF THE COUNTY and the

COMMUNAL HARMONY.

> - the placement of KETU in the most effective point of the 4TH

HOUSE adds to the VULNERABILITY of 4TH HOUSE INDICATIONS in the USA,

notably to SUDDEN and VIOLENT events.

>

> In short, we see a rather complex natal potential during this

period suggesting, given the appropriate transit placements and

afflictions that there will be

> - problems in the HOUSING market that undermines the FINANCIAL

STABILITY

> - concerns about INCOME (a recession) increase and add to the

DIVISIVENESS and the volatility in the FINANCIAL MARKET

> - CONFLICT (or war) disturb the COMMUNAL HARMONY

>

> This is exactly what we have been seeing in the USA since the

onset of this period.

>

> Major transit triggers:

>

> - Early 2007: stationary KETU at 23° Leo and 2nd house afflicts

4th lord VENUS at 23° 51' - CRISIS ERUPTS

> - Spring/Summer 2007: 6th lord JUPITER in Scorpio becomes

conjunct natal 8th lord SATURN while aspecting transit Saturn in

Cancer and 1st house. At same time, transit Saturn opposes natal 2nd

lord Sun - FINANCIAL STABILITY and major PROBLEMS for GOVERNMENT and

WEALTH.

> - Autumn 2007: SATURN becomes conjunct stationary KETU while

JUPITER again becomes conjunct natal SATURN. OIL PRICES RISE to

unprecedented heights attended by increased CONCERNS about a

RECESSION.

> - January 2008: transit 10th lord MARS enters Gemini and 12th

house while also being aspected by stationary RAHU in the 8th house.

JUPITER in Sagittarius aspects SATURN and then becomes afflicted by

natal RAHU. INVESTOR CONCERNS exceed the courage and the STOCK MARKET

DROPS.

> - March 2008: JUPITER becomes exactly conjunct natal VENUS and

all Functional Benefic planets in the chart become weak due to bad

placement. CONFIDENCE is further eroded and stocks drop further.

>

> RESULTS during Jupiter sub-period

>

> 1. A housing crisis erupts in 2007 threatening financial

stability and economic growth

> The sub-prime mess that erupted in late February 2007 and has

been deepening since, was warned about by major international

organisations like the IMF in the Autumn of 2006, warning about the

RISKS associated with EXOTIC MORTGAGE INSTRUMENTS. Unfortunately, the

warning came too late, as hundreds of billions worth of very risky US

home mortgages had been wrapped into complex debt instruments and

sold around the world. The deepening problems make investors

increasingly concerned and the uncertainty only seems to increase

>

> 2. Massacres at universities involving mentally unstable but

highly armed young men

> The murder rampage of a deranged and disillusioned young man at

a large University on April 17, 2007 resulting in almost three dozen

fatalities shocks the nation. Many more, albeit smaller, such

incidents follow.

>

> 3. The War in Iraq becomes highly controversial in 2007

> Communal dis-harmony with the WAR IN IRAQ reached a fever pitch

in 2007 with PEACE ACTIVISTS becoming very prominent. The rising cost

of the war also alarmed US law makers in 2007, who became

increasingly resistant to allowing continual increases in GOVERNMENT

SPENDING on the war. The US Federal Government Budget Deficit reaches

new heights.

>

> We can expect that these issues will be further aggravated due

to the following transits in 2008

>

> 1. Jupiter conjuncts natal Venus again in July and November -

DISTURBANCE to COMMUNAL HARMONY

> 2. Stationary nodes afflict natal Sun from July to September -

CRISIS/GREAT STRAIN for PRESIDENCY and WEALTH

> 3. Jupiter comes under aspect of natal Rahu in

August/September, along with transit Saturn - CRISIS/GREAT STRAIN for

FINANCIAL STABILITY and POLITICAL PROCESS.

> 4. Jupiter aspects Saturn two more times, in July and then from

September to December - CONFLICT

> 5. transit Saturn comes under aspect of natal Saturn -

VIOLENCE, especially when 4. and 5. are operating at same time.

>

> The PRESIDENTIAL ELECTIONS of 2008 and their outcome are likely

to be attended with more DRAMA than is usual for the USA. As earlier

mentioned, there could also be significant problems in the FOREIGN

POLICY area.

>

> Best wishes,

>

> Thor

>

>

> --

--------

> Never miss a thing. Make your homepage.

>

>

> --

--------

>

>

>

> Checked by AVG.

> Version: 7.5.519 / Virus Database: 269.21.7/1329 - Release

3/14/2008 12:33 PM

>