The 1980s junk bond and LBO boom. (P.S: Sorry for any disturbances the advertisements above may have caused you)Michael Milken and Drexel Burham Lambert may be strange names to newcomers to the investing scene but in the 1980s they were at the centre of Wall Street when takeovers via leveraged buyouts (LBOs) were the rage. The former was the star junk bond dealmaker for Drexel and was hailed as the successor to Pierpont Morgan as a leader of Wall Street.
In the early 1980s, the US was emerging from a decade-long bear market characterised by surging annual inflation rates of >10%. The Federal Reserve under Paul Volcker took decisive action through raising interest rates to sky-high levels (long-term bonds had yields of >15% by 1981); by 1982 the inflation situation was under control and the Fed started lowering rates. The stock market had stagnated and having reached ridiculously cheap valuations, started to bottom out. What are LBOs/leveraged buyouts? LBO deals fluorished in the years 1984-89. Outlaw Derivatives To Save Civilization. (LPAC) -- "It is time to break the silence on derivatives," Lyndon LaRouche said yesterday, after observing the carnage in the financial system and the pathetic response from the so-called regulators. "The true, hyperinflationary factor in the situation is the unregulated, insanely leveraged derivatives trade.
This is what is killing us. This is the great crime of Alan Greenspan. " LaRouche described the derivatives market as a "hyperinflationary bomb, crushing the international financial system," warning that "Until you just shut down the whole derivatives trade--wipe these gambling obligations off the books of the financial system--you are just kidding yourself. " "Unless and until you deal with this derivatives bubble, which cannot be bailed out, you are just kidding yourself," he continued.
Blood In The Streets You don't have to be a financial insider to see that the entire global financial system is collapsing, since that collapse is now front-page news every day. Deadly Derivatives. Because the Past is the Present, and ... In the days between October 14 and October 19, 1987, major indexes of market valuation in the United States dropped 30 percent or more. On October 19, 1987, a date that subsequently became known as"Black Monday," the Dow Jones Industrial Average plummeted 508 points, losing 22.6% of its total value. The S&P 500 dropped 20.4%, falling from 282.7 to 225.06. This was the greatest loss Wall Street had ever suffered on a single day. 1 According to , an authoritative source of current-events information for professional research and education, the 1987 crash"marked the end of a five-year 'bull' market that had seen the Dow rise from 776 points in August 1982 to a high of 2,722.42 points in August 1987.
" Unlike what hapopened in 1929, however, the market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday October 22. Many feared that the crash would trigger a recession. Price of Petroleum. Long-term oil prices, 1861–2011 (1861–1944 WTI, 1945–1983 Arabian Light, 1984–2011 Brent). Red line adjusted for inflation, blue not adjusted. Due to exchange rate fluctuations, the red line represents the price experience of U.S. consumers only (linear graph). Long-term oil prices, 1861–2011 (logarithmic graph) Brent barrel petroleum spot prices since May 1987.
Due to exchange rate fluctuations, the real price line is only relevant to the United States and countries with a currency tied to the U.S. dollar at a constant rate throughout the period. Weekly reports on crude oil inventories or total stockpiles in storage facilities like these tanks have a strong bearing on oil prices The demand for oil is highly dependent on global macroeconomic conditions. The price of oil underwent a significant decrease after the record peak of US$145 it reached in July 2008. History[edit] Price history before 2003[edit] Price history from 2003 onwards[edit] Benchmark pricing[edit] Market listings[edit] List of acquired or bankrupt United States banks in the late ... This is a list of banks in the United States affected by the 2007–2012 global financial crisis. The list includes banks (including commercial banks, investment banks, and savings and loan associations) that have: been taken over or merged with another financial institution,been declared insolvent or liquidated, orfiled for bankruptcy.
Banks bankrupt, filed for bankruptcy protection, or closed and received by the FDIC[edit] The Federal Deposit Insurance Corporation (FDIC) may assume deposits of banks or allow other banks to assume them. The largest banks to be acquired have been the presumed Merrill Lynch acquisition by Bank of America, the Bear Stearns and Washington Mutual acquisitions by JPMorgan Chase, and the Countrywide Financial acquisition also by Bank of America. IndyMac Bank was also a large bank that was changed into a bridge bank by the FDIC, after its failure, until the funds can be disposed of. 2007[edit] 2008[edit] 2009[edit] 2010[edit] See also[edit] Too big to fail General:
Late-2000s financial crisis. The TED spread (in red) increased significantly during the financial crisis, reflecting an increase in perceived credit risk. The financial crisis of 2007–2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s.[1] It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world.
In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd–Frank regulatory reforms were enacted in the U.S. to lessen the chance of a recurrence.[20] Background[edit] Share in GDP of U.S. financial sector since 1860[27] The U.S. Subprime lending[edit] Banking (Special Provisions) Act 2008 - Wikipedia, the free ... The Banking (Special Provisions) Act 2008 (c 2) is an Act of the Parliament of the United Kingdom that entered into force on the 21 February 2008 in order to enable the UK government to nationalise high-street banks under emergency circumstances by secondary legislation.
The Act was introduced in order to nationalise the failing bank Northern Rock after the bank was supported by Bank of England credit and a private-sector solution was deemed "not to provide sufficient value for the taxpayer" by the UK government. After the nationalisation of Northern Rock, the Act allowed for the nationalisation of the mortgage and personal loan book of Bradford & Bingley on 29 September 2008.[5] Nationalisation of Northern Rock - Wikipedia, the free ... On 17 November 2011 it was announced that Virgin Money were going to buy Northern Rock for £747 million, from UK Financial Investments Limited (UKFI).[6] The deal was finalised on 1 January 2012 and by October of that year the high street bank operated under the Virgin Money brand.[7][8] 2007 credit crisis[edit] Emergence[edit] People queuing outside a branch in Golders Green to withdraw their savings due to fallout from the subprime crisis.
On 12 September 2007, Northern Rock asked the Bank of England, as lender of last resort in the United Kingdom, for a liquidity support facility due to problems in raising funds in the money market to replace maturing money market borrowings.[9] The problems arose from difficulties banks faced over the summer of 2007 in raising funds in the money market. Government intervention[edit] In December, the EU regulators approved Britain's actions to provide aid to the Bank by concluding that it was in line with European emergency aid rules.[17] Virgin[edit]
£850bn: official cost of the bank bailout - UK Politics, UK ... The National Audit Office (NAO) revealed that £107m will be paid to City advisers called in to work on the rescue because the Treasury was too "stretched" to cope with the sudden financial crisis which broke in the autumn of last year. The commitments include buying £76bn of shares in Royal Bank of Scotland and the Lloyds Banking Group; indemnifying the Bank of England against losses incurred in providing more than £200bn of liquidity support; guaranteeing up to £250bn of wholesale borrowing by banks to strengthen liquidity; providing £40bn of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme; and insurance cover of over £280bn for bank assets. In its report, the NAO ruled that the "unprecedented" £850bn of support for the banks was "justified" to head off the potential damage of one or more of them going bust, and preserving people's savings and confidence in the financial system.
The bonus question: which side will eventually prevail? Q. Q. Q. April 21, 2008 - Bank of England unveils £50bn mortgage bailout.