What an afternoon to decide to stay in. What compelled me to stay indoors on a postcard-perfect Sunday in L.A.? Who knows? But online, I discovered that the world markets are crashing, the dollar is diving without an oxygen tank, and the Tokyo Nikkei market is in freefall. Hong Kong is crashing. Now it’s time for Mumbai to open…
In my article, Rage, Wrath and the Whole New World, I asked what it would take for the “Masters of the Universe”, those traders on Wall St. – and around the globe – to wake up and realize that the religion to which they have given themselves ever since theology school (MBA) was a lie. Their Bible (Atlas Shrugged) was written by the Ayntichrist herself, and it was all a fraud. Sorry, but it’s time to wake up.
Well, this morning, I will enjoy no schadenfreude at the expense of the 14,153 employees of Bear Stearns at 34 US and 14 foreign offices. I wish them well. Most of them are going from bespoke to broke overnight. Any of them who were holding stock in the company for which they worked will be left with cab fare.
Likewise, Carlyle Capital has defaulted on all its obligations and will liquidate its assets. Forget your check, pal, they’re selling your desk.
If you’re working for Goldman Sachs, they will be announcing another $3 billion in additional losses.
Every single Asian correspondent is anticipating Lehman Bros. will go under this week. Pack your Mark Cross bags, guys.
CNBC cut away from their usual nonsense coverage and went to live feeds from Tokyo, Sydney, and Honk Kong, as all their markets were tumbling. The only thing going up is the price of Gold, Platinum, and, of course, oil.
When you wake up Monday morning, this is what happened last night:
Fed Chairman Ben Bernanke lowered the prime rate a quarter point (on Sunday?!) He may drop it another full point this week. (Cri-sis mode!)
JPMorgan Chase bought the insolvent Bear Stearns (which, just three days earlier, was propped up with more of Bernanke’s printed money) - for $2/share! (It was trading at $30/share on Friday, so if you had any shares of Bear Stearns, your money is gone. But then, you haven’t been paying attention if you still had anything invested in that sector. By the way, in January, James Cayne, then CEO of Bear Stearns magnanimously declined a year-end bonus for 2007. Wasn’t that White of him? Never mind it had earlier been disclosed that his salary and other bonuses for that year was $40 million. He guided a venerable investment firm from a stock value as high as $20 billion to virtual worthlessness. Calling Henry Waxman!
Analyst Leslie Phang, answered the question, “Where should your money go right now?” Answer: “Anything but green. Cash is king, but not dollars. “What about oil?” “Black is good. Just any color but green!”
But President George W. Hoover hasn’t had a thing to say, other than that he doesn’t see a recession happening. The fundamentals of the economy are strong. Hey, even Dad’s Carlyle is gone. Maybe the one upside is that he can’t do any more harm now that we’re completely broke.
Have you checked whether your bank is still in business this morning?