Merrill Lynch may cut 1600 jobs soon, as they struggle with billions of dollars of mortgage-related write-downs. Merrill could also unveil write-downs of as much as $10 billion from the fourth quarter.
John Thain, Merrill Lynch's new CEO, is in talks with Chinese and Middle Eastern investors that could lead to a capital-raising sale of another big stake in the US investment bank. Thain is taking calls from a number of potential buyers, understood to include sovereign wealth funds from the Gulf and China, in a bid to raise extra capital. The observer quoted an unnamed US observer as saying that the Temasek cash would not be enough to insulate the group from the impact of the global credit crunch and another unidentified source as saying Thain was seeking extra overseas capital to boost Merrill's balance sheet and to avert potential future liquidity problems.
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I take a look at this - which I find hard not to believe is not a result of the bursting of the real-estate/housing bubble - and what I perceive to be the idiocy which is causing successive loss after successive loss on Wall Street in recent days, and immediately think in terms of 1927's foolishness all over again.
I remember Alan Greenspan's comment when the market was on the rise - "irrational exuberance", he called it - and I see much of the same irrational action today, just in the opposite direction.
Take oil, for example. It once again broke the $100/barrel benchmark, based on "expections" the U.S. would announce a seventh straight quarter of below, and "fear" that violence in Nigeria - which has not impacted its production of oil - might do so.
Say what?
I found the following on Bloomberg (http://www.bloomberg.com/apps/news?pid=20601082&sid=aqVlMdAxVyzM&refer=canada)
"Not one drop of oil was disrupted when Benazir Bhutto was assassinated last week, but prices surged," Mueller said. "Anything that can is sending the market higher. That's what happens when you have a jittery market."
Huh?!?
So let me get this straight: Nothing real or tangible has actually happened which directly impacted oil supplies - but we hammer its price ever wildly upward because ... of expectations? Fears? Psychological BS???
Whiskey Tango Foxtot!!!!
That tells me we are actually not working with what a thing is worth - which, to me, is the foundation of what free-market capitalism means - but instead catering to the psychological well-being and/or reasonable reactions of people I must assume are fundamentally insane (given the volatility of what they're acting upon) and allowing such people to determine these things for ... well, pretty much everything.
Uh oh.
Is this really what (and who) we want controlling our economic viability and well-being?
Regrettably, I do not have a solution. But it sickens me to watch the markets move for no good reason, know that especially some of the ridiculous trends we've seen recently hurt those people everywhere who depend upon them for their every-day survival, and see signs which tell me no one's paying attention to Santayana's maxim as regards what happened in the late Twenties and early Thirties.
Sorry for the rant. But I must be honest and say I find almost everything about what I see in the markets, these days, as utterly laughable. Do any of the people there have so much as two undamaged neurons to rub together? I guess the same goes for the morons who runs some of the companies showing the most egregious foolish behavior.
Any ideas? Something sure would be nice to settle the mind that there is something more reasonable than what I believe I see ...
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