Worried about the state of the world economy, the American piece in particular? You might want to skip the Bear Stearns story.
Bear Stearns, recently the fifth largest investment bank in the US and heavily invested in the subprime mortgage market, was badly damaged by the troubles there. So badly that it’s been forced to sell itself for a relative song, and even that in a stock-only transaction.
A collapse of Bear Stearns could have heightened anxiety in world financial markets amid a deepening credit crunch. JPMorgan’s acquisition of Bear Stearns represents roughly 1 percent of what the investment bank was worth just 16 days ago.The deal marked a 93.3 percent discount to Bear Stearns’ market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29. The company is set to report its first-quarter results after the closing bell on Monday.
Bear Stearns shares closed Friday at $30 a share. At their peak, the shares traded at $159.36.
A 99% loss in two and a half weeks, worth thirty bucks on Friday, sold for two on Sunday — it’s the kind of thing that leads skittish investors to panic. So JPMorganChase stepped in, and the government acted on a weekend, hoping to forestall the event everyone’s worried about.
Jim Rogers on the reason the Fed didn't allow BS to fall into bankruptcy:
On why Bear Stearns was bailed out:You know the reason they did it this way was because, if Bear Stearns had to declare bankruptcy, you'd realize that Bear Stearns paid out billions of dollars in bonuses in January - six weeks ago. If he let them go into bankruptcy, they all would have had to send back their bonuses.
This is what they're doing, they're doing it so they don't have to give back their bonuses. That's why they didn't put them into bankruptcy. Jamie Dimon has gotten a great deal because the Federal Reserve is paying for it. The Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders' Mazeratis.
http://themessthatgreenspanmade.blogspot.com/2008/03/jim-rogers-on-bear-stearns-bailout.html
Posted by: Buck on March 17, 2008 10:18 AMOn why Bear Stearns was bailed out:You know the reason they did it this way was because, if Bear Stearns had to declare bankruptcy, you'd realize that Bear Stearns paid out billions of dollars in bonuses in January - six weeks ago. If he let them go into bankruptcy, they all would have had to send back their bonuses.
This is what they're doing, they're doing it so they don't have to give back their bonuses. That's why they didn't put them into bankruptcy. Jamie Dimon has gotten a great deal because the Federal Reserve is paying for it. The Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders' Mazeratis.
http://themessthatgreenspanmade.blogspot.com/2008/03/jim-rogers-on-bear-stearns-bailout.html Posted by: Buck on March 17, 2008 10:22 AM