Wall Street’s dark day for M&A – Sign of the ending

NYSE-margin-debt-SPX-growth-since-1995image005The signs are everywhere–the game is ending. Although, one should never underestimate the general tendency to become self-hypnotized by wishful thinking and the desires of a limited, but powerful, dominant force in the financial markets, the professional money manager and the supportive fictions that can be created by government and monetary authorities to keep air in the balloon, the sound of the leaks are becoming more and more pronounced. In time, the absurdity of this financial bubble will be the stuff of folklore.

When we hit the end of this cycle, it will not be just the end of a financial market bubble replete with stories of investment bankers moving to Vermont and raising organic cows, it will be the catalyst for the next phase of the extreme polarization of America and the likely disintegration of the nation. The end of empire is never pretty, particularly when there is no nation out of the same civilization that is immediately able to take the mantle, as the US did in the case of Great Britain’s fall. Without a civilizational torch-bearer, the turbulence in the globe will be far, far more dramatic. Let us hope it leads to a rebirth of a better, more humane one and not the thermodynamic stasis of a new Dark Ages, or worse our total self annihilation. 

In the space of a few fraught hours, deals worth more than $100bn collapsed, sparking concern about the sustainability of a transaction boom that has gathered pace since the start of the year.

First to go down was 21st Century Fox’s $71bn attempt to buy Time Warner. The media company controlled by Rupert Murdoch blamed the death of the deal on Time Warner’s failure “to explore an offer which was highly compelling”.

The announcement, coming just three weeks after Mr Murdoch made public his interest, brought an abrupt end to a takeover battle that many had expected to last for months.

Within minutes of the news breaking, theories as to what had “really” caused the hard-charging media baron to walk away were flying. Investors, too, were ill prepared and sent shares in Time Warner down 11 per cent in after-hours trading. By contrast, Fox’s shares, which had declined steadily since it made its offer, rose 6.7 per cent.

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via Wall Street’s dark day for M&A – FT.com.

And a few more economic-market must reads:

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