Merrill Lynch to Write Down Additional $15 bn

In breaking news from the New York Times, Merrill Lynch is expected to write down an additional $15 billion USD in their earnings release next week.  This is larger than the max expected $12 bn write-down predicted by analysts.  They will also be looking to sell off its Bloomberg stake, take in a $4 bn investment from what will probably be a foreign sovereign wealth fund, and change their management style.

The market so far is taking this far too lightly.  A $3 bn write-down (just the difference in what analysts expected) months ago would have crushed the market.  But a $15 bn write down?  That is downright disastrous.  This means they have written down something like $23.5 billion in the last 2 quarters.

On another note, John Thain is sitting quite pretty himself.  He gets to step in to a disaster of a situation, write everything down to zero as fast as he can, and then reap the profits when they get to write paper back up to 30 cents from the 10 or 15 cents they have to mark it to now.

Either way, get out of the way.  This market is only beginning to get ugly.  Look at how much the S&P has come up since 2002 and then only barely come off here in the last few months.  Does the market and economy feel 100% better since 2002?

*image source Bloomberg

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