PM is Paul Murphy, NH is Neil Hume
Markets live transcript 8 Sep 2008
Live markets commentary from FT.com
Hi thereWelcome to Markets Suspended.As you can image, Alphaville HQ has been a picture of tranquillity this morning.
The only noteworthy things that have happened is that the US treasury has launched the biggest bailout in history and the London Stock Exchange is broken.Neil and I are keeping out heads down. And we think some of the readers should as well.You know that there’s a real chance that someone has come on here during one of our regular glitches – and then they’ve gone and traded on the SETS order book or something – and they’ve infected the WHOLE London stock exchange system.
random pic for yousome questions below about this morning's outageincluding will there be an auction to get things going againand when will that bewe don't knowbut the LSE has set up an incident websitewhich suggests things could be getting going soonwe are in an auction nowupdate on the incident siteBryce has posted it belowFTSE 100 still being shown by the LSE as up 199.5 points at 5,440.2.But you can use the City Index price to right here -- FTSE rooing bet quoted at 5492that is effectively the Footsie futureAnyway, along with the rest of the market we have thrown our tin hats into the air this morning.Celebrating the smashing news that the US government has had to put $100bn a piece behind each of Fannie Mac and Freddie Mae.It’s the other way around.What do you mean? How could they put anything behind the government? They’re bust.NO – its Fannie Mae and Freddie Mac.OhFecked and Fooked , for short.Oooooooh. Nice one.oh, i dont know actuallygoing back to Fred and FranI think we should put up some research for the readerswho's done some good stuff??I will start with Goldman Sachs
US Treasury places GSEs into conservatorship The US Treasury announced it has placed both Fannie Mae and Freddie Mac into conservatorship due to safety and soundness concerns. Specifically, the GSEs will suspend all dividends for existing common and preferred stock. The Treasury will also invest $1 billion upfront in senior preferred stock into each GSE with potentially further investments to cover future negative equity positions (from a GAAP standpoint). The Treasury has committed to covering negative equity positions with periodic senior preferred stock investments up to $100 billion per GSE. The senior preferred stock will be senior to all existing common and preferred stock, and carry a 10% coupon rate paid quarterly. In addition, the Treasury immediately receives warrants equivalent to a 79.9% ownership stake in each GSE going forward, and is entitled to a quarterly “fee” starting in 2010. The details regarding the fee are yet to be determined.....
And in a dandy little bit of ironic foreshadowing, considering what was to transpire one week later, they turn to another investment bank's thinking on Fannie and Freddie:
And Lehman
