Archive for March, 2008

So… I guess the whole JPMorgan Chase buying Bear Stearns for just $236 million was just a test.

JPMorgan Chase & Co on Monday raised its takeover offer for Bear Stearns Cos to about five times its original bid and struck a deal to buy nearly 40 percent of the bank, all but locking up the controversial acquisition.

Under the revised deal, JPMorgan will buy 95 million newly issued Bear Stearns shares, and Bear’s board agreed to vote in favor of the offer. With those shares, JPMorgan would own 39.5 percent of Bear Stearns and have secured the backing of Bear Chairman James Cayne, owner of a 3 percent stake in Bear.

“It looks like JPMorgan has this deal sewn up right now,” said John Augustine, chief investment strategist with Fifth Third Investment Advisors.

From the sound of things, I think they had it “all sewn up” last week, but someone must have come in and complained about something that would have soured the whole deal. Why else would they come back and decide to offer 5 times their original amount?

I think even Howie Mandel would say that, compared to a year ago (at $170.23 per share), $10 per share is still a very good deal.

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Wow, now you know it’s getting bad…

How bad is the housing market? Bad enough that a cash-strapped builders’ group is forced to sell its own home.

Three years after moving into its posh, new $3.5 million headquarters, the Home & Building Association of Greater Grand Rapids is putting the building up for sale.

Chief Executive Judy Barnes said the association is hampered by the weak economy, a sluggish residential building industry and declining membership. The setbacks have resulted in some pledges made toward paying for construction of the 15,000-square-foot headquarters going unfulfilled.

The association spent $1.5 million of its own money on the building. The remainder was to be covered by donations and the sale of its previous headquarters.

Barnes declined to release the amount still owed on the new building but said the association was not in financial trouble.

If they are “not in financial trouble”, why is the association being “forced to sell it’s own home”? I think we can all see the writing on the wall. Too bad we can’t believe what we see on the wall either.

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It’s always nice when machines malfunction and make our lives a bit easier. Oh who am I kidding, we all know it totally sucks when the tools we use everyday malfunctions. It’s horrible. It’s painful. It’s so not worth your time. Or is it?

A cash machine became a big hit this week after it started paying out twice as much money as it should.

The ATM, outside a supermarket in Hull, began spewing out double the money on Tuesday afternoon and continued doing so for several hours, drawing a crowd of hundreds eager to cash in on the mistake.

Those requesting the maximum daily withdrawal of 300 pounds were being given 600 pounds and a receipt for 300.

Wow. If I went to an ATM and it gave me double the amount I asked for, but only gave me a receipt for what I had asked for, I think I would mention it to the bank. Those ATM’s do have cameras and it wouldn’t be hard for them to see exactly how much you walked away with.

After several hours the machine finally ran out of money.

…

Police said those who had benefited could face charges but only if the operator complained.

Oh, you know the operator will be complaining about it, else they will be paying out all that extra money themselves.

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Bear Stearns, the fifth largest investment firm in the United States, was in danger of collapsing. The government stepped in to prevent a total collapse and to ensure the orderly function of the financial markets.

JPMorgan Chase was permitted to acquire Bear Stearns for $2 per share, or $236 million, which was less than 90% of the company’s value on Friday.

U.S. Treasury Secretary Henry Paulson on Monday defended government moves to rescue Bear Stearns Cos Inc (BSC.N) from bankruptcy, saying it was important to ensure the orderly function of financial markets.

Speaking to reporters following a White House meeting between President George W. Bush and his economic advisers, Paulson said those worried about the government rescue creating a “moral hazard” should keep in mind that Bear Stearns (BSC.N) shareholders face considerable losses with the sale of the investment firm to JPMorgan Chase (JPM.N) for $2 a share.

There’s something amiss when the fifth largest investment firm in our nation is only worth $236 million, yet just last month, the Yahoo board of directors refused to entertain Microsoft’s $44.6 billion offer.

That puts the value of Bear Stearns at 1/2 of 1 percent of the value of Yahoo (based on the amount of Microsoft’s offer). Yet, if they were allowed to collapse the demise of the investment firm would have had a ripple effect on thousands of businesses across the nation and it would have destroyed much of our economy.

That’s an awful lot of power for one investment firm, if you ask me, and now JPMorgan Chase, already the third largest banking institution in the United States, wields more of that power.

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I wonder how long it took for this guy to work up the nerve to open the car door and launch his well thought out plan? I wonder if he owned a watch.

A Pennsylvania man is accused of attempted bank robbery — and if poor planning were a crime, he might be charged with that, too.

Police say a man arrived at the Citizens and Northern Bank in the borough of Liberty on Thursday and waited in his car for about 20 minutes. Shortly after noon, he tried to enter the bank 100 miles west of Scranton wearing a ski mask and carrying a rifle. But the bank’s Liberty branch closes at noon on Thursdays, foiling his plans.

The man fled the scene, but bank employees took note of his license plate number. A 28-year-old suspect is jailed in lieu of $50,000 bail.

Of course, he couldn’t make bail because, yes, you guessed it, the bank was closed.

Posted without commentary:

[Hat Tip: Whatchu Tawkin Bout]

The subprime write-downs could hit $285 billion!!

Standard & Poor’s said on Thursday write-downs for large financial institutions on subprime debt are likely past the halfway mark, but could still hit $285 billion.

S&P’s estimate of write-downs was up from the $265 billion figure it published in January, but the credit ratings agency said an end to subprime write-downs was in sight.

“The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation write-downs of subprime asset-backed securities,” S&P credit analyst Scott Bugie said in a report.

If you compare the write-downs to the yearly U.S. budget it doesn’t sound so big, but $285 billion is a lot of dough. Just look at it.

$285,000,000,000

That’s a huge number!

If you made $15 per hour, you would have to work for 19,000,000,000 (that’s 19 billion) hours or more than 6,506,849 years (at 8 hours per day) to pay that off.

In 2007, the budget for the state of California was $102.3 billion.

The average price of home (in 2007) in the United States was $229,100. Using this figure, the subprime lending write-down would amount to more than the value of 1,243,998 homes across the United States. That’s more homes than there are people in Dallas, Texas!

Some say this is just the tip of the iceberg. Some say things are looking better and there is a light at the end of the tunnel. Someone put their ear to ground and make sure that isn’t a train coming.

Today was the craziest of days. I learned first hand about the world around me in a way that I don’t normally get to. It all started when I had to go pick up some prescriptions for our kids. All three of them are sick and we took them to the doctor, and I ended up spending a fortune at the pharmacy.

I knew things were going to be hectic today when I started backing out of the garage before the liftmaster garage door opener had a chance to get the door open. It moves pretty quick so my mind must have been racing pretty hard to forget to wait for the door to open.

On the way to the pharmacy I usually take the back roads because it ends up being quicker than trying to jet down the interstate. Today, that was not the case. It seems one of the communities near here has installed an osco residential gate and I can no longer cut through their well manicured subdivision. No worries though, I found another way that only added a few seconds to my trip.

When I finally arrived at the pharmacy, I was once again rushing because I ran smack dab into the automatic door. I haven’t bumped into something that hard since my college days when I worked in the college library and used to start lowering the faac gate at the loading dock and hit my head one time as I ducked under the darned thing.

It’s good I smacked myself on the head though, because it made the pain of the pharmacy bill not seem so bad.

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How stupid is this?

The New Haven schools superintendent said Wednesday that he will review a principal’s decision to suspend an eighth-grade student for buying candy in school.

Michael Sheridan was stripped of his title as class vice president, barred from attending an honors student dinner and suspended for a day after buying a bag of Skittles from a classmate.

The New Haven school system banned candy sales in 2003 as part of a districtwide school wellness policy, said school spokeswoman Catherine Sullivan-DeCarlo.

So, the principal of this school, Eleanor Turner decided to keep kids safe by suspending students who purchase candy from other students because of the districtwide school wellness policy. Wow. Talk about becoming a nanny state. Since when are school officials allowed to dictate what your children are allowed to eat? Since when is the school responsible for their nutrition? Oh sure, we have school lunch programs and all that, but shouldn’t the schools concentrate on educating the children rather than treating them like criminals?

The principal doesn’t stop there. Apparently students at her school are so rich that they may be carrying large amounts of cash…

“She had concerns about the safety of students carrying large amounts of cash in school,” Mayo said. “The question is, was the punishment too harsh? That’s something we need to evaluate.”

Large amounts of cash. Large enough to buy a bag of Skittles? Oh shut up!

Does that headline shock anyone, really? Stand outside a Wal-Mart for an hour and tell me how many people look like they are going inside to look at computers, let alone Linux based computers.

Wal-Mart has stopped selling Everex’s Linux-based PC in its stores because of a tepid response from customers, although it will continue to sell the product online, the retailer said Tuesday.

The customer response to the US$199 Everex TC2502 Green gPC desktop was not as high as expected, said Melissa O’Brien, a Wal-Mart spokeswoman..

Wal-Mart, the largest retailer in the U.S., agreed last year to carry the product as a test and stocked it in about 600 stores where it saw high interest in computers.

“The idea was to see if shoppers in our stores would respond as they do online to the offering. The answer is that customers did not respond to expectations, so we decided not to restock,” O’Brien said.

So, who sits online and ends up ordering the Linux PC’s? The housewives? The working couple who barely has time to see each other let alone find time to order a computer? The out of work realtor who has nothing better to do? No. The geeks. The nerds. The computer savvy people who know just what their getting when they decide to order a “Linux PC”. Duh.

Once everyone gets it through their head that mainstream America has no idea what Linux is, the sooner we can all move past that and work on ways to make sure people have a choice in the future.

[Crossposted at The Alligator Pit]