IS MORGAN STANLEY HISTORY??

Does anyone in here think that this giant will have to go under pretty soon?? Their stock has been sliding by 60% and it seems like this trend will continue in a very vigorous way. Thoughts??...After MORGAN maybe it will be GOLDMAN

 
indian-banker:
"too big to fail" is a thing of the past. If Mitsubishi's investment doesn't come through and Moodys downgrades MS, then I think it's pretty justified to say they will merge with another bank.

I think the notion of "too big to fail" in regards to Morgan is referring to a Lehman-style bankruptcy.

The Fed will not allow that to happen with Morgan or Goldman; if Mitsubishi pulls out, then yes you are right that they may have no choice but to merge.

However, it is still possible the Fed will inject capital directly.

 

The Fed was trying to show that they weren't going to encoruage moral hazard, go socialist, etc etc by not bailing out Lehman. Considering the events of the last 3 weeks, those are all moot points right now. JPM, Goldman, MS, Citi, and BOA are too important to fail. They're not going anywhere, even if Paulson has to hand each one of them a $100bln no strings attached gift.

 

Mitsubishi is not pulling out. Had it not been for Monday vacations in asia/usa, it would have closed then. Morgan Stanley will not collapse. If they do, Goldman goes next and then we'll see a 4000 Dow and unraveling of the entire financial system domestically and globally.

 
Best Response

Mitsubishi will pull out. If they go ahead, the moment the deal is done, Mitsubishi will post an instant $1.5b - $2b loss depending on MS share price range of $7-11 we saw. If so, the MUFG shareholders will sue the management, and they know that. The bad side of story is, if they pulled out, that will cause system collapse. so they can't openly announce they will pull out.

My guess is that MUFG is liaising closely with US government to allow them to formulate a nationalization plan in place, before MUFG announce their withdrawl. So that as soon as MUFG deal falls through (which doesn't have any economic sense whatsoever, not to mention US style finance is gone) US government will nationalize Morgan Stanley.

If MUFG management is foolish enough (won't be too surprising, this is Jap we are talking about, and I'm Jap myself so don't call me racist) and go with this, I think MUFG share will take a battering. What future is there in a firm managed by the monkey?

 

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