Bear Stearns prepared to file for bankruptcy

You all read about JP Morgan buying Bear Sterns for USD 270 Million, right? That is less then a 10th of its last week value.

 

The funny thing is that I was speaking to a friend of mine who works at a well respected company handling financial news and he mentioned they got nothing as buy recommendations for Bear Sterns on Friday to hand out to banks for their Private Banking Clients. Speak after me: “Never trust an analyst”

And the most shocking of all if I may cite the New York Times:

Even as those talks took place, Bear Stearns simultaneously prepared to file for bankruptcy protection in the event a deal could not be struck, underscoring the severity of its troubles.

My comment: I am speechless – so n0comment 😉

update:see here the big loosers of this current event: Bloomberg article

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Northern Rock a Bank gets Nationalized

Here is my opinion about the Nationalization of Northern Rock. If you don’t know the story here are 2 good places to read: Detailed Summary of Northern Rock and the crisis: A current FT article about the Nationalization.

From the FT article: (my comments are in blue)

Shares in the bank, which closed at 90p on Friday, will be suspended on Monday morning and shareholders can expect virtually no compensation for their equity.

Northern Rock is bankrupt. The Government helped out with an emergency loan but NR is bankrupt. Why would the shareholders be allowed to make money? The nationalization makes sense as the Government has access to cheap money. With Northern Rocks current (before nationalization) refinancing rate NR makes losses on a daily basis.

 

The government’s move stunned shareholders, who were last night considering action. Jon Wood of the SRM hedge fund, the bank’s biggest shareholder, said: “This is a very sad day for the stock market, banking industry and the reputation of the UK as a financial center.”

I am very sad about the Northern Rock crisis but the one thing that makes me smile a little bit is that the greedy Hedge Fund Managers who thought the government would help them (why should the government help them?) will loose a substantial amount of money through a clearly not overly intelligent bet. Now all the government has to do is make the Nationalization without mistakes so that the greedy Hedge Funds cannot sue the Bank / Government.

 

Robin Ashby, founder of the Northern Rock small shareholders group, said he was “shocked and appalled” that shareholders “were having the bank stolen away from them”.

There was nothing to be stolen. The bank without the governments emergency bail out is bankrupt e.g. dead e.g. not able to operate (!) Can you steal a dead bankrupt company? I feel sorry for the small shareholders. However if investments in the stock market can be risky…

 

Sir Richard, whose group only found out about the government’s decision just before it was announced, said he was “very disappointed” in the decision and believed he had “a very strong proposal”. Virgin had been asked to pay £200m for a government guarantee and £100m-£200m for equity warrants but it is believed that it found this too difficult.

If Northern Rock had been worth £5bn it is understood that the government would only have received £500m in warrants, whereas the Virgin consortium could have made between £1bn and £1.5bn, causing huge embarrassment for the government.

Whilst I believe the Virgin group is better at running a business 😉 Sir Richard Branson is a hard core business man and would only take on the bank if he could double his investment in 3 years or triple it in 5. Why should the tax payers support this move and the government support him through special government guarantees and loans?

What do you think?

 

The Internet and Privacy – Get yourself removed from Rapleaf quickly

After reading about Rapleaf on ZDNET I thought to give them a try and see if they find any information about me.

The answer is really really scary. Rapleaf knew of Social Networking sites I was not aware I had joined. Rapleaf also linked my true identity with my false one… What does this mean? Well I have a few e-mail addresses I use to try out new things but by using them too often I might once even use one of those addresses with my real name. Here is one example from one of my e-mail addresses:

Rapleaf knew that I was I member at Plaxo (had forgotten this one). LinkedIn, Flickr, Facebook, Hi5 (don’t use this one), Myspace (different name, different age as Myspace asks you to sign up to see certain profiles..), Ringo (also did not know I was a member there – just requested my password so I could close my account).

It frightens me to see that companies have all this access and bundle the information and also sell it on to other companies. The first thing I did was to start the annoyingly long and complicated opt out process

 

Opt-Out

An individual may request information taken down for a given email address by emailing support@rapleaf.com.

Additional, individuals can elect to have their information opted-out from Rapleaf’s database by following these steps:

1. Email opt-out@rapleaf.com from the email address requesting to opt-out. Rapleaf will then email back an opt-out form to confirm the email address.

2. Print out this customized opt-out form, fill it out, and mail it to the following postal address:

Rapleaf
Attn: Opt-Out Request
657 Mission Street, Suite 600
San Francisco, CA 94105

Rapleaf will then quickly follow up with a confirmation email. All relevant information pertaining to this opted-out email address will also be removed.

What is your take on this? Is it legal for them to do this?

Update: Also see this blog entry: Some more Rapleaf concern

A cheap way to move money from one Country to another

This article is only useful to you if you have bank accounts in at least 2 different countries and you need to get funds across these counties and currencies.

 

Many Expats like me have bank accounts in different countries and need to send money abroad or send themselves money from their “home” bank account. The same for me…

When I arrived in the UK in November 2002 I found out that English banks really do rip EU citizens off when they want to transfer money “home”. There were ridiculous fees of GBP 20.00 involved just to send a few quid to another country. Because of this pain I did a little bit of research at the time and came across a company called Moneybookers. Because I am a curious person I tried them as I needed to get some funds from Austria to the UK to get me started. Well I needed a deposit for a place to stay and also having tried British Public Transport for 2 weeks I was certain I needed a car.

Moneybookers is very simple. You register, register your bank accounts on the MoneyBooker site then you can instruct your bank to send money from your bank account to the Moneybookers bank account (via Internet banking) in the same country. It will take a 3 business days to arrive at Moneybookers. You then receive an e-mail advising you that you have successfully loaded your Moneybookers account. The next step is to withdraw the money from your virtual MoneyBookers account to your personal Bank Account in the other country. What you need to know is that MoneyBookers holds bank accounts in all important countries this enables them to offer this service.

The costs involved? A flat fee of EUR 1.80 and a 0.95 % fee if you convert between USD, GBP or EUR. Tell me a bank that has similar or lower fees and you are due a beer. UK Banks charge around GBP 20.00 for sending 500.00 GBP to Austria plus the exchange rate which is usually about 2 % of the Interbank exchange rate. I paid as little as 1.80 EUR plus 4.75 GBP

Disclaimer: The Link to the Moneybookers site includes a referral program and if you use the service I am due some referral commission from Moneybookers. However this is not the reason I recommend them as I am using them frequently and have told many people about them without the referral link….

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Interesting Readings:

1) A US company exploited a flaw in an automated Defense Department purchasing system: A company charged extreme amounts of money for shipping goods to Irak or Afghanistan. Bills for shipping to combat areas or U.S. bases that were labeled “priority” were usually paid automatically, said Cynthia Stroot, a Pentagon investigator. Pentagon Paid $999,798 to Ship Two 19-Cent Washers to Texas

2) Since I am still unhappy about the poor Skype Performance (note it is still down) I searched for Skype sucks on News.Google and found this excellent article from ZDNET: Skype failure and the Enterprise 2.0 mess

See here my other postings on skype: skype 4 years and 196 million registered users later and economic facts about skype 

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ISA: 6.3 % Interest Guaranteed And Tax Free For UK residents

After reading this article in the FT this weekend I thought I needed to check my ISA figures.

Smile: 5.25 % my favorite bank – just this time lacking in rates

HSBC: 5.3 % generally good

Halifax: 5.55 % had a nasty experience with them*

Halifax guaranteed interest (might be worth checking out at these high rates) 6.2% for 1 year

*The downside with Halifax? Because Halifax works slow and unorganized I missed the ISA deadline 2006. 1 month was not enough for Halifax to close 1 account and open an ISA and allocate payment – really nasty – This is a warning 😉

Then I thought I would check Money Supermarket for their highest rate: 5,85 %

Knowing that Moneysupermarket does NOT offer the best rates as they take sponsorship for referrals I though I would extend my search.

National Savings and Investment 6.3% Guaranteed to stay 0.55% above the base rate until at least 5 April 2008 – tax free

The best of all? National Savings and Investments is backed by HM Treasury which makes it a AAA investment

The downside? You can not transfer your old ISA’s to NSI.

Article correct July 30th 2007 – Rates may vary.

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