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Posted
Sep 24 2009, 12:13 PM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Traders are hot on zombie stocks these days, trying to make a buck from companies everyone else has written off as dead.
Washington Mutual went bankrupt, but its stock is suddenly smoking -- gaining 64% Monday, the Los Angeles Times reports. No one really thinks the company is going to magically return to life soon, but investors are hoping even a tiny uptick in the share price will bring profits.
Remember Lehman Brothers? Shares of the bankrupt bank have quintupled in the last four weeks, the Times reports. And General Motors -- or, should I say, Motors Liquidation Co. (MTLQQ) -- has seen shares more than double.
It's a dangerous game, playing around in these stocks that common sense would tell you to stay away from. So who's dabbling in the dead?
Experts tell the Times that aggressive day traders are likely to blame. They're snapping up enormous volumes of the shares, looking for something as small as a 1-cent increase on a 1 million share block
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Posted
Mar 31 2009, 06:56 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
With mortgage rates at historic lows, housing prices plummeting and Washington throwing billions at housing-market recovery efforts, why is it still so damn hard to get a loan?
And while the easy answer is that banks are flat-out broke, the real answer may lie in an esoteric corner of mortgage finance that has all but disappeared: warehouse lending.
In the heyday of the housing boom, small mortgage companies were able to compete with huge financial institutions by tapping so-called warehouse lines of credit. Using cash from their warehouse lender to fund loans at the closing table, as big banks do, these smaller mortgage shops could often provide better service than their bigger competitors, though at the same low rates.
Warehouse lenders, often big banks themselves -- remember Washington Mutual and Countrywide (Bank of America (BAC))? -- held onto loans until they were sold in the secondary market. Turnaround time could be anywhere from a few days to a few months for larger, more complex transactions.
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Posted
Dec 02 2008, 02:46 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
It's official: The U.S. economy has been in recession since last December, according to new figures from the National Bureau of Economic Research. While confirming "what many Americans had already been feeling in their bones," in the words of the New York Times, the new figures also tell a portentous tale: "the current economy downturn is already longer than the average for all recessions since World War II, according to the committee of economists responsible for dating the nation’s business cycles." The stock market reacted with typical restraint—the Dow Jones industrial average "plunged" 679.95 points, or 7.7 percent, while the S&P 500 fell 80.03 points, or 8.9 percent, BusinessWeek reports. Not to be outdone, the Nasdaq also shed 8.95 percent.
What will stop the rot? Further reductions in short-term interest rates are "certainly feasible," Federal Reserve Chairman Ben Bernanke said yesterday. But with the "benchmark rate already at 1%, more cuts would bring the rate to near zero, prompting concern that the Fed would be out of recession-fighting ammunition," writes the Wall Street Journal. Over at Treasury, they're looking to expand the current bailout by "reviewing applications from hundreds of banks seeking rescue funding," as Secretary Hank Paulson told a Fortune 500 forum that he is "actively" developing new programs to correct the financial fallout, CNN Money reports.
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Posted
Oct 28 2008, 03:27 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
No one with an abacus, a calculator or a mainframe will ever know what the global credit crisis has cost in real money. Lost jobs means lost tax revenue. Lost bank capital means a drop in share values. Government aid must be near $1.5 trillion when the taxpayers' $700 billion is added to what all other nations have put in to shore up banks.
The Bank of England reckons the cost of the near-collapse of the financial system is $2.8 trillion. It does not say precisely how it came up with that figure, but in the guessing game that hardly matters.
Looking at the issue from a simpleton's perspective, Citigroup has lost $200 billion of is market cap. The number for Wachovia is more like $100 billion. The loses to Lehman and WaMu shareholders are of a similar magnitude. By these calculation
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Posted
Sep 30 2008, 09:47 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
Congress wants to crack down on CEO mega-salaries for banks participating in the bailout. And while the politicians argue how best to do that, Alan Fishman of Washington Mutual is headed for the doors with $19 million in his pocket.
If that wasn't outrageous enough, consider this: Fishman started the job three weeks ago. I never saw the employment ad Fishman answered, but it must have read something like this:
WANTED: Top executive for train-wreck bank about to be seized by federal regulators. Must be able to look busy while FDIC sells business from under you. Previous experience with angry shareholders sitting on worthless stock a plus. Perks: $7.5 million hiring bonus and $11.6 million cash severance.
Fishman got the best temp gig in history.
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Posted
Sep 29 2008, 12:56 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
The Dow found a way to rally Friday, achieving an almost 300 point reversal off the bottom. Of course the move was advertised as an assumptive action on the part of investors that a deal would be crafted on Capitol Hill over the weekend.
Interestingly, action in the credit market said the exact opposite. If I had to rely on one to be a canary in a coal mine, it would be the latter for me.
Be that as it may, equities looked pretty good, especially those banks that could be among those still standing when the dust settles. There was a part of me that wondered if the market was up because it took the Washington Mutual news in stride, with just a little initial nervousness and then displaying adult-like calm. Then there was another part of me, albeit a smaller part of my being, that wondered if the market was up on Friday because there was a chance of a deal not happening. I know it's one of those things we’ll never really know, however, because a plan is going to be unveiled.
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Posted
Sep 26 2008, 11:48 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
With everyone comparing the current economic crisis to the Great Depression, I'm struck by the similarities to the Panic of 1907. Courtesy of derivatives expert Satyajit Das, take a look at the following except from the Economist:
"...public credit depends on public confidence…The financial crisis in America is really a moral crisis, caused by the series of proofs …that the leading financiers who control banks, trust companies and industrial corporations are often imprudent, and not seldom dishonest. They have mismanaged…funds and used them freely for speculative purposes. Hence the alarm of depositors and a general collapse of credit…"
These words were written on November 2, 1907
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Posted
Sep 26 2008, 12:19 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
The bailout of the financial system has officially become a typical Washington dog-and-pony show. Partisan politics, it turns out, do in fact trump economic expediency and our elected officials' desire to act in the best interests of their constituency.
Meanwhile, back in reality, the short-term money market -- the oil that greases the gears of the financial system -- is coagulating.
According to the Wall Street Journal, cash is flowing out of the commercial paper market at an alarming rate. In the past two weeks, the market contracted by $113 billion, the largest Minyanville's Why Wall Street Will Never Be the Sameamount since last summer when the Federal Reserve was forced to take unprecedented steps to unfreeze credit markets.
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Posted
Sep 26 2008, 03:54 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Washington Mutual failed yesterday and most of its assets where sold to JP Morgan. The price was $1.8 billion. JPM will have to write down $31 billion in bad loans, but, since Jamie Dimon is now the king of the banking world, he should be able to raise the capital to cover that. In the meantime, he has picked up $307 billion in assets.
According to The Wall Street Journal, "The deal will vault J.P. Morgan into first place in nationwide deposits and greatly expand its franchise." The people who get drawn-and-quartered in the process are the WaMu bondholders and those who own the common stock. Washington Mutual shares were at over $36 a year ago. Now, they are worth nothing. About $50 billion in market cap has been destroyed.
The failure, the biggest in U.S. history, does not mean much. Depositors are protected. The beating shareholders take is no different than any other when a large company fails. The system worked well. A healthier firm got the pieces of the failed firm on the cheap. JP Morgan will be the better for the deal and when the financial markets recover, the purchase of WaMu's assets may look like the deal of the century.
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Posted
Sep 19 2008, 10:30 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
A week ago, the United States had the most efficient capital allocation system in the world.
Our free-market economy enabled money, credit and resources to be sent to the economic players who needed it. Entrepreneurs could raise money to start new, innovative businesses; researchers could seek out cures for diseases that touch millions of lives, as well as those that afflict just thousands; firms that made enough bad decisions went bankrupt.
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