Bear Stearns

Wow.

$54 friday morning, dumps to $26 on word the feds and JPM will bail it out.

JPM buys for $2 fukcing dollars. $TWO FUCKING DOLLARS.



Fed cuts rates on a fucking SUNDAY.

Japanese markets dump.

 

Nuts.

JPM gets their prime brokerage division, at the very least.

The Fed is painted into a corner. Defend the dollar and freeze credit, risk a run on the rest of the financial institutions, or continue to devalue the dollar.

$4 dollar gas very soon.

Unfortunately, I have no gold exposure.

I'd heard the rumors that this mess wouldn't be over until a notible bankrupcy occurs. This is historic. EDITED TO ADD: Not to infer that the crisis is 'over', but some clued in folks saw this in advance.

 

It is NUTS.

1/3 of Bear Stearns is employee owned, so expect some Enron type stories / lawsuits.

Really sad. BSC was $170 in the last year. $2.

And yeah, no real exposure to gold here, either.

 

two dollars.

Is the Fed shitting the bed here, or what's going on exactly?

 

I think the real problem is that no one knew (knows?) just how bad the financial institutions balance sheets are. When market players started to realize that the default rate on these assets were much worse that anticipated, the market for these asset backed securities dried up, and it because almost impossible to 'value' these assets. 80 cents to the dollar, 60?, 40? Credit froze.

When the institutions revalued these holdings, they have to write them down and their financial position is much weaker. S & P came out last week and essentially said that these firms had done an admirable job valuing these writedowns and didn't expect further drastic write downs (we'll see).

The Fed cuts were in part to provide liquidity and stimulate business activity.

Banks make money a steep yield curve. These cuts help keep the short end of the yield curve low.

Problem is these cuts are terrible for the dollar, and with dollar based commodities, contributes to higher import prices (ie expensive oil)

The problem was easy credit and very poor risk management. I think the Fed was a late to act and got behind the curve.

 

this is like the dot com crash of 2000.

 

Not as bad, IMO. Bad loans are bad loans. Fake companies - lots of them - having Billions of dollars in capital is much less rational situation.

 

i guess i meant similar in that all of a sudden there's going to be a lot of companies whose "real" value is being revealed to be significantly less than the market thought. they will get weeded out and the real players will remain.

are there more to come?

 

market adjustment, you're saying?

 

any more 'bear stearns'es out there?