The bubble to end all bubbles? - Valleywag Comments

The bubble to end all bubbles?

random_play — Sat, 05 Apr 2008 02:08:02 PDT

@FiveStarEggRoll: Harry Wang, you are now my Kiyosaki! Also my horse whisperer and my crime-solving psychic medium.

The bubble to end all bubbles?

raincoaster — Thu, 03 Apr 2008 22:57:21 PDT

@sample032: Americans as a whole have a negative net worth, actually. They passed the barrier of insolvency several years ago, another contributor to what we're seeing here.

If investment money does flee the bundled mortgage sector, it won't just evaporate. It will be invested somewhere else, and tech is looking relatively stable comparatively speaking. Of course, if the shift is significant enough to get Jim Cramer babbling about it, all hell will break loose and there will be another bubble. Why? Because for the longest time everyone loves them.

raincoaster

The bubble to end all bubbles?

matto — Thu, 03 Apr 2008 22:38:51 PDT

@WagCurious: Even my cat knows the fed wasn't going to let bear stearns go insolvent. Is that better than 'everyone'?

matto

The bubble to end all bubbles?

WagCurious — Thu, 03 Apr 2008 20:36:37 PDT

@matto: "Everyone knows it", what is this high-school? He had paper in hand that said $2/share OR if the shareholders do not approve, he still gets the building at a firesale price. Either way he wins. The speculation is that he went higher because he also agreed to assume Bear Sterns' debt in the original deal (even if the deal fell through). The revamped deal does not stick him with the debt if it falls through (and also has a better chance of getting past shareholders). But shareholders would have no vote if the company goes insolvent (they can line up behind the preferred creditors and maybe get a desk and chair set). So if they turn any deal down they end up with nothing. Or does everyone know that as well?

WagCurious

The bubble to end all bubbles?

matto — Thu, 03 Apr 2008 17:53:42 PDT

@WagCurious: Wrong. The only place Jamie got BSC at $2 was in fairy tale land, and everyone knows it. Do you think he decided to offer 500% more out of magnanimous generosity? The deal still had to pass shareholder approval and there was no way they were going to bite.

matto

The bubble to end all bubbles?

WagCurious — Thu, 03 Apr 2008 15:15:56 PDT

@matto: Jamie Dimon got Bear Sterns for $2. He had a signed deal and everything. Then he decided to give 'em an extra $8 (in a modified deal) because the initial deal actually had him assume all Bear Sterns debt even if the deal fell apart, and at $2 it was looking like that might actually happen.

So I'm saying compare the deal that Jamie got with anything walking the halls down on Sand Hill Road. Where would you rather put your money? And no, time lapse photography of S.F. is not a viable option as much as you seem to be into it.

WagCurious

The bubble to end all bubbles?

matto — Thu, 03 Apr 2008 13:28:22 PDT

@WagCurious: I can't seem to find anyone who got BSC at $2. While I have to admit that it makes for exciting copy, you really undermined the credibility of the rest of your comment opening with it. Do you write for CNBC?

matto

The bubble to end all bubbles?

sample032 — Thu, 03 Apr 2008 11:49:57 PDT

"...as Americans put their savings into stocks."

Americans don't have much money, and what they have is generally tied up in their homes.

And that's where the housing bubble differs from the dot com bubble. The housing bubble had lots of average people using large amounts of leverage (0% down: what's that, 1:0 leverage?) for speculation. That's more analogous to what happened before the great depression, or what's happening in China, now.

And guess who provided this leverage: the soon-to-be head of regulation, the Federal Reserve.

sample032

The bubble to end all bubbles?

FiveStarEggRoll — Thu, 03 Apr 2008 11:49:43 PDT

There are no bubbles. There are only differing investment strategies and those who exploit them to the fullest.

Harry "its all the same by all the same" Wang

FiveStarEggRoll

The bubble to end all bubbles?

WagCurious — Thu, 03 Apr 2008 11:41:23 PDT

I think you've nailed it Owen, except for the new temptation to put money into cheap loan bail-outs. Bear Sterns at $2 a share? Name me one VC that would pass on that. Though that deal is reserved for the very few, you are going to find people selling auction rate notes on the cheap for at least a year. If you actually were sitting on a pile of capital, would you rather buy up the auction note of a midwest utility for pennies on the dollar or would you want to give some money to a kid that says social networking is the next big thing? Or another example, you could white knight into one of the buyouts that are flailing right now. Would you pass on ClearChannel at pennies on the dollar? Capital is in such great demand right now that a reasonable "venture" would be to own a power utility for a few months. See if Zuckerberg can compete with that.

WagCurious