Jim Kramer - Bear Stearns Is Fine???

Damn, did he really say this? I guess we can't win them all . . .

The Government Bails out AIG

Looks like the United States Government finally realized the financial mayhem that would have been caused if it would have allowed AIG to fail. The government decided to bail out the large insurer by offering them an $85 billion short-term bridge loan.

I guess now most people are wondering why the let Lehman die and not AIG. Well, the answer is obvious. Lehman just doesn't matter. Too many firms worldwide have exposure to AIG and imagine the collapse that would come if it would have failed. Yup, lots of payouts of credit default swaps. Hey, let's not forget that it was the repo market that ultimately put the bullet in Lehman's head.

Well, Uncle Sam, you've saved the world for now . . .

GOD BLESS AMERICA!

AIG is the Next to Blow!

With the fall of Lehman and the recent acquisition of Merrill Lynch it now looks like another firm in the financial services industry is about to go under.

Word on the street was that AIG had about 48 - 72 hours to live if it couldn't raise a few billion dollars within this time frame. Well, they were downgraded and have to raise about $75 billion to survive.

The world is dying . . .

"Damn, I told you we should have cashed that damn check!"

COVER OF TODAY'S JOURNAL

Pretty scary stuff

Bank of America and Merrill Lynch to Merge?

The Wall Street Journal Online reports that Merrill Lynch and BofA are in talks to merge. Personally, I think this sucks; but, if it's for the better good of mankind then let it be.

LEHMAN BROTHERS IS DONE!!!

Barclay's recently announced that they are walking away from talks to purchase the ailing investment bank. Now, with no purchaser, we could be awaiting a market meltdown in the morning.

Curious to see how this plays out . . .

More Wall Street Humor: The Dull Life of a City Stockbroker

Funny to see how the British view the world of finance careers. Here's a funny skit from an old Monty Python episode about a City (British version of Wall Street) stockbroker:

Things Look Bad for Freddie and Fannie

At the end of Monday's trading shares of Freddie Mac were down 25% and shares of Fannie Mae were down by 22%. To make matters even worse, both stocks are down over 90% from a year ago.

This huge drop in price is attributed to market concern that the two mortgage giants will be unable to avoid a government bail out. The reason being that Freddie and Fannie will not be able to raise enough money to offset resent losses due to mortgage defaults.

To matters even more worse, the price of Freddie and Fannie bonds have fallen and the spreads between Freddie and Fannie debt to Treasuries have widened to an increase in yield. Yields on debt instruments increase as risk in the issuer rises in order to compensate bond purchasers for the decreased likelihood that they would see a return of principal and future cash flows from interest payments.

With total losses between the two firms totaling over $14 billion in the last four quarters, it's hard to see how this is going to play out.

Ex Bear Managing Director Points Finger at Goldman for Firm's Failure

A former senior managing director at Bear Stearns has announced that he is writing a book that details the events caused the collapse of the financial firm.

Reports reveal that the unpublished manuscript goes in heavy detail about what was going behind the scenes at the investment bank before it failed and was eventually bought out by JPMorganChase. However, the real juicy part of the story is that the anonymous author states that Goldman caused the firm's demise when a certain Goldman official sent an email stating that they will no longer act as the intermediary for Bear and its investors. As a result, the firm's stock was sold short and investors and creditors pulled money and debt off the books like Cabbage Patch dolls in the Christmas of '85.

I'm curious to read this book when it's officially released.

Merrill Pays New Employee $40 Million for 5 Months of Work

I guess you'll only see things like this in a few places: the NBA, the NFL, MLB and on Wall Street. A franchise that is losing money decides to dish out millions to a new start player in hopes of winning in the future.

I mean, the Knicks do it every time they renew Marbury's contract. Well, I guess now it's Merrill's turn as they recently hired Thomas Montag, a Goldman alum, as the new head of sales.

So yup, this guys is definitely balling out of control and can even keep the $40 million if he decides to leave before the end of the year.

Damn, why couldn't I have this guy's job?

WALL STREET by Oliver Stone

HAPPY MONDAY!!!

As another week starts and we all begin the grind all over again I would like to spend a special dedication to all of my fellow people working on the Street--Wall Street, that is!

The movie that motivated and continues to motivate us all--Wall Street by Oliver Stone:

Being a Good Athelete Makes You a Good Trader

Citi Executive Gets $28 Million Not to Work!

WTF?

You read it right. A top executive at Citi has reported been paid $28,000,000 not to work for competitor firm for the next fifteen months after he resigned from the global bank. Let's also not forget to mention that the executive is the head of the Chairman of the investment banking unit at City--the very unit that is causing the company to experience these problems.

Citi has been a lot of trouble lately as it has seen a 36% decrease in its stock this year, massive lay-offs and billions of dollars in write-downs just to name a few. Now, I wonder how in the hell can they afford to pay an ex-employee almost $30 million not to work for any other firm!

Damn, I hope I grow up to become as valuable as this employee. Imagine quiting your job and your company paying you just so you don't go to work for someone else!

Foreclosure Leads to Suicide of a Mother in Massachusetts

It has been reported that a woman in Tauton, Massachusetts took her life this past Tuesday because she was unable to cope with having her home foreclosed. The woman was 53 years old, happily married and was a mother.

Her home was schedule to be auctioned last Tuesday as she had not paid the mortgage on her and her husband’s three bedroom home. The company that issued the mortgage, PHH Mortgage, reported that she had not made payments for the past 42 months.

The auction was scheduled for 5:00 PM that day. However, instead of finding an empty home the mortgage company found the woman’s body and immediately notified the police that she had shot herself to death with her husband’s rifle. When her husband and family were interviewed, they indicated that they had no idea that the home was going to be auctioned as the woman had hid all notices of foreclosure from her family.

Before the suicide, she faxed a letter to the mortgage company notifying them that she would be dead by the time they came to foreclose her home later that day. She also left a note for her family that instructed them to use the insurance money to save the house. The home was worth $232,000 and it is uncertain if her husband will be able to file a claim for the insurance policy he had on his wife.

With the U.S. economy and the housing crisis weighing heavier on the average American and destroying all of these “American dreams” virtually over night, I doubt this will be the last of the sad stories of victims as a result of this mess.

Could Merrill Be the Next to Blow?

Bulge bracket and multinational firm Merrill Lynch has recently announced that they will be be selling over $30 billion in mortgage assets at a huge loss.

The firm currently plans to try to offset this loss by raising and addition $8 billion in new common stock.

I'd hate to say it because Merrill is my favorite bank on the Street; but, with all the stories I've been reading about this firm in the paper lately I wouldn't be surprised if they blew up.

Amex Down and Out As Recession Reaches the Wealthy

After reporting less than stellar earnings on Tuesday shares of American Express have taken a dive. What is causing the charge card giant to fall on hard times? Well, the short and sweet answer is simply the economy.

American Express is suffering due to a combination an increase in defaults and a decreased use of cards. This signals that the recession could be creeping its way into the lives of wealthy, as American Express has traditionally catered to the upper-crust of American society.

I'm pretty interested to see how this plays out as rising inflation and other economic conditions make the wealthy more adverse to using their American Express cards, which balances must be paid off in full each month.

MARKET WATCH: Trying to Beef up Your Portfolio? Feed it more McDonalds!

Many investors alike are seeing record decreased in the overall performance of their portfolios. Despite expert advice from financial advisors and the sophisticated asset management techniques exercised by leading asset management firms, mutual funds and hedge funds your average investor is getting mauled by the Bear.

Yes, we are in a recession and trailing close behind or leading the way of the ailing economy is the proverbial Bear Market. Now, if you’re an ex-boy scout such as myself; or, you have been camping at least once or twice you know not leave food around lest you inadvertently lure these creatures into your campsite. Well, when it comes to the financial markets you can throw that malarkey out of the window!

One way to steer the Bear away from eating away at your precious portfolio is load up on some McDonald’s stock. That’s right, I said McDonalds—the fast food joint made famous by Ronald McDonald, Grimace, Hamburglar, The Fry Guys and Chicken McNuggets.

The Wall Street Journal reports that it expects the mega burger joint to increase its earnings per share by 21% when compared to last year. While most stocks have been hit by the receding economy, McDonalds has seen an increase in sales do to penurious behavior exercised by the common consumer as workers opt for an “extra value meal” over the $8 hero found in most gourmet delis. In addition, The Journal reports that increased sales overseas stemmed by a weakening dollar at more power the punch as the higher valued foreign currency is converted to U.S. currency.

These, along with other factors make the purchase of shares of McDonalds look quite appetizing to the Bullish investor.