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Who will be next after Bear Stearns?
In an earlier post, I pointed to evidence that Lehman was in trouble. Today Global Economic Trend Analysis links to numbers that paint a gloomy picture for Merril Lynch and Morgan Stanley:
” Without naming names quite yet, what would you think of a company that accomplished the following in 2007?I could cite 20 or more similar financial ratios and they are all stunning. Who is this firm? Merrill Lynch (MER) Some statistics on another potential bad bank:
- Wrote down book value from $39 billion to $32 billion or from $41.35 to $29.34 per share.
- Increased shares outstanding from 868 million to 939 million.
- Increased Treasury Stock from 351 million to 418 million.
- Increased long-term borrowings from $147 billion to $201 billion.
- Increased preferred stock issuance from $3.1 to $4.4 billion.
- Increased Total debt to common equity to 2816.81%.
- Wrote down book value from $35 billion to $31 billion or from $32.67 per share to $28.56 per share.
- Increased long term borrowings from $127 billion to $160 billion.
- Increased total debt to common equity to 2496.53%.
- Maintains an $88 billion position in Level 3 assets, or 283% percent of shareholder equity.
Who is this firm? Morgan Stanley (MS) There are only two solutions in my mind for what can happen to these firms. They can raise capital or sell themselves, perhaps for not very much.”
In another post, I will talk about the challenges facing two commercial banks, Citigroup and JP Morgan Chase.
Corvin is an activist and writer based in Toronto. Read more by Corvin Russell.
