The climate for business in the United States is forever changing. During the booming economy of the early 2000s, businesses were man’s best friend.
Today, following bailouts, golden parachutes, and a pervasive belief that the financial companies are ruining the world, one has to take a step back to think about the current business environment.
As a Wall Street protestor might say, “Goldman Sachs is evil!” But if Goldman Sachs is evil, then shouldn’t Apple be 10x more evil? If wealth is greed, and greed is evil, Apple is the greediest of them all!
Goldman’s Evil: $52 billion
The Federal Reserve has agreed to allow banking companies to bring back their dividend policy, ending a provision that was intended to keep revenue in bank coffers until bailout money could be repaid.
In going forward, the nation’s largest banks, many of which were once some of the highest-yielding firms on Wall Street, may again become high-yielding.
The Fed ‘s Bank Dividend Policy
JP Morgan announced on Tuesday that it would accept gold as collateral against loans made on brokerage and investment accounts. Before that key announcement only Treasuries, equities, and some other corporate paper/debt securities could be used as collateral. Gold is now positive carry.
What is a Positive Carry Asset?
Bear Stearns issued an earnings report today that showed the company produced a $115 Million dollar profit in the first quarter of 2008. That amounts to annual earnings of $460 Million per year, while BSC is valued currently at $1.38 Billion. With that kind of earning potential, JP Morgan still has a lot of juice to squeeze out of its assets. Read more…
Two very key news announcements were made today. The Bear Stearns buyout by JP Morgan has a new pricetag of $10 per share and the Sirus XM merger will be completed. Read more…
JP Morgan and the Federal Reserve acted in a buyout to prop up Bear Stearns falling investment bank investments. Bear Sterns was disproportionally hit by the credit crunch, causing it to nearly go bankrupt. An agreement between JP Morgan and the Federal Reserve to buy up the banks assets and protect its clients and borrowers. Read more…