Daily Archives: September 28, 2008

As Wachovia (WB) And Fortis Falter: The Bailout Will Have Been Too Little

R218533_855025Two European financial firms fell apart during the last 24 hours. The U.K. government said that mortgage bank Bradford & Bingley is being nationalized after investors and lenders lost confidence in the group. B&B’s stock market listing was canceled. Investors got nothing.

Belgian banking and insurance group Fortis received an 11.2 billion euro ($16.37 billion) injection from the Netherlands, Belgium, and Luxembourg. It would have failed without the capital.

In the US, Wachovia (WB) has begun negotiations with Citigroup (C) and Wells Fargo (WFC) to sell all or parts of its operations. The New York Times says that the buyout conversations are active.

In the European cases, potential buyers walked away because the finances of Fortis and B&B were so severely damaged that no other financial company would take them on. With Wachovia, other banks may wait until its assets can he bought at fire sale prices. The examples of Bear Stearns and Washington Mutual have given strong companies an idea of how little they can pay for potentially valuable properties.The credit crisis has perverted the process of valuing assets.

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Posted on: September 28, 2008 – 6:01 pm in Economy, , ,

Banks Wait To Screw Wachovia (WB) Shareholders

Wachovia20color1_1Banks and investment banks who watched Bear Stearns, Washington Mutual, and Lehman go down in flames have learned a lesson. Bank of America (BAC) moved too fast to buy Merrill Lynch (MER). If it had held off a few days, it could have gotten the broker at a much lower price. Investors were driving its shares down relentlessly. Of course, BAC might have risked another company picking off Merrill. That is probably its excuse for buying too early and wasting shareholders’ money. JPMorgan (JPM) got an extraordinary deal on WaMu’s asset by letting the bank reach the point of failure.

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Posted on: September 28, 2008 – 7:30 am in Banking, , , , ,

Wall St. Turns On Google (GOOG)

GoogThe perverse view of Google (GOOG) as a "recession proof" company has already been given lie by the firm’s share price. Last week, the stock got as low as $421, near its 52-week low of $406 and down from its period high of $747.

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Posted on: September 28, 2008 – 7:10 am in Analyst Calls,

UK Financial News Wrap: FT, Times, Telegraph, Observer

NewspaperAccording to The Times of London, the Treasury is poised today to nationalize Bradford & Bingley, the troubled mortgage bank.

The Times also reports that hedge funds and institutions could be forced this week to write down billions of dollars related to trading positions that were frozen when Lehman Brothers was put into administration two weeks ago.

The FT reports that Wachovia (WB) approached potential buyers, including Citigroup (C), Wells Fargo (WFC) and Spain’s Banco Santander, on Friday after a 27 per cent plunge in its shares deepened fears over the future of the sixth-largest US bank.

The Observer reports that UK inflation rose to 4.7% last month.

The Telegraph reports that hedge funds are preparing to return between 10 per cent and 50 per cent of their assets under management to investors who want their money back at the end of yet another quarter of dire investment performance

Posted on: September 28, 2008 – 6:57 am in International Markets, , ,

Apple (AAPL): Unlocking The iPhone, Hammering It Partners

Applelogo1Apple (AAPL) has begun the process of "unlocking" its new 3G iPhone, a move that caused controversy with the earlier version of the handset.

The unlocked phone can be used on any wireless network. That takes business away from Apple’s cellular distribution partners, lead by AT&T (T) in the US. An unlocked iPhone does not force consumers to sign expensive subscription deals with Apple’s carrier affiliates. That, in turn, undermines their ability to make money.

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Posted on: September 28, 2008 – 6:43 am in Wireless, ,

Bailout Deal Looks Done

TreasuryThe bailout may be done. According to The Wall Street Journal, "U.S. lawmakers said a tentative deal has been reached to bailout the troubled financial system. Treasury Secretary Henry Paulson said bailout deal legislation still needs to be finalized, but that `I think we’re there’ on a deal."

The latest wrinkle to the legislation is that it "will expand the range of firms that can sell troubled assets to the government to include pension plans, local governments and community banks serving "low- and middle-income families."

The announcement of a finished bill could come before the open of Asian markets.

Douglas A. McIntyre

Posted on: September 28, 2008 – 5:25 am in Uncategorized