| Archive for bridgebuilder.myfreeforum.org bridgebuilding effort, cross culture, cross faith, not bridge construction |
| obmar |
Merrill Lynch posts $7.8bn losshttp://news.bbc.co.uk/2/hi/business/7193915.stmMerrill Lynch posts $7.8bn loss Merrill Lynch building Wall Street banking giant Merrill Lynch has reported a loss for 2007 after getting caught up in problems stemming from a slump in the US housing market. The company said it had made a net loss of $7.8bn (£3.9bn) in the 12 months to the end of December. It is the latest US and European bank to reveal losses related to investments linked to the US mortgage market. Included in those results is a massive $14.1bn write-down on investments related to sub-prime mortgages. It is a shock to the system, they are trying to get as much transparency as possible about their sub-prime exposure Mark Durling Brewin Dolphin Securities It is the company's second quarterly loss in a row. The previous chief executive, Stan O'Neal, stepped down in October because of the bank's poor performance. New boss John Thain said: "While the firm's performance for the year is clearly unacceptable, over the last few weeks we have substantially strengthened the firm's liquidity and balance sheet." Widespread woes Earlier this week, Citigroup and JP Morgan also announced write-downs because of their exposure to the sub-prime loan sector. JP Morgan Chase said its earnings for the last three months of 2007 fell 34%. Net income was $2.97bn (£1.5bn) in the quarter to the end of December, down from $4.53bn a year earlier. MAIN SUB-PRIME LOSSES SO FAR Merrill Lynch: $22.1bn Citigroup: $18bn UBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bn Bear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bn Barclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bn JP Morgan Chase: $1.3bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $439m Source: Company reports Timeline: How the sub-prime crisis unfolded On Tuesday, Citigroup reported a $9.83bn net loss for the last three months of 2007 after having to cut the value of its investments by $18.1bn. Banks are struggling to calculate how much their investments in assets backed by sub-prime mortgages are actually worth, which is why they are reporting massive write-downs. Analyst Mark Durling at Brewin Dolphin Securities said about Merrill Lynch's results: "It is a shock to the system, they are trying to get as much transparency as possible about their subprime exposure. "They're being ultra-conservative here." The sub-prime market is focused on providing loans to those with limited or poor credit histories. During the US housing boom, this market expanded significantly. But a series of interest rate rises over two years meant many sub-prime borrowers could no longer afford their monthly payments, causing them to default on loans. |
| The Inquisitor |
I think these large financial institutes should be forced to pay for their own mistake without government intervention, but that won't happen. The reason the governments have to interfere is that these same institutions carry many pension funds for huge private businesses across the US. If these institutions were to go belly up, there would be millions of retired people who would lose all of the retirement money in one fell swoop. The US government couldn't possibly shoulder the responsibility of taking up the slack. |
| obmar |
in the third world
the government will be condemned for cronyism in cases of bailouts and foreign interventions will encourage the public to revolt. |
| The Inquisitor |
This is true, obmar.
I think one of the reasons could be the disparity between the vast majority of the citizenry and those in power. Certainly there have been common revolts throughout history such as the American Revolutionary War, the French Revolution, and several revolts in England, but those came at a time when the average person was barely making a living and the elite few had almost all the entire wealth. In modern times, those clashes have been relegated to developing countries. I've noticed that if you give the average person a job, a vehicle for transport, a decent roof overhead, fairly good clothes to wear, enough food to live comfortably and a little bit of extra cash, the number and intensity of citizen revolts diminishes greatly. And it doesn't take much, either. But if you look at countries where there is a strong Middle Class comprising anywhere from 30% to 60% of the population, the likelihood of a class revolt is greatly diminished. All this means that the elite can continue their corrupt ways for a lot longer without fear of repraisal because the people will be divided on the need for major reform. It's only when a very substantial portion of the people live in or near abject poverty and have almost nothing to lose and everything to gain, that revolts take place. So in poorer countries such abuse could very well trigger mass revolt, in the richer countries there is a huge portion of the country too lazy and comfortable to demand such change. Therefore, the elitists here and in other industrialized nations might have their knuckles rapped for being bad boys, but that's about as far as it gets. People will complain, but they'll also need to get back to their daughter's wedding, their son's latest problem, or TV. |
| obmar |
Now the question is,
will it be just US or the tidal will spread elsewhere. |
| The Inquisitor |
obmar,
You're story is woeful as is, but there are other losses not related to the sub-prime which are equally damaging. The young currency technician at France's General Société who lost around $9 billion and others like him are really bringing down the markets worldwide. |
| obmar |
Yes, heard about that one too..
sobbing for momma. "I did nothing wrong" is he a scapegoat or something? |