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JP Morgan decides not to Steal Bear Stearns, Quintuples bid
online.wsj.com — In a move to assure the deal gets done, J.P. Morgan Chase has decided to quintuple the price they're paying for Bear Stearns from $2 per share to $10. I guess you can afford to do that when the US Federal Reserve is financing the deal and taking on all the risk.
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- rexona, on 03/25/2008, -14/+12Ive got no problem with a Reserve Bank using public funds for bail out in the case where the collapse is going to spiral down through the economy..(take note of Japans experiences)...Although...it is also fair that the public funds be rewarded with a return appropriate to the level of risk - assuming the bail out works. Just like a bank would take interest from me or you when lending funds..
On a different note, this is where media in Australia is a real let down - here in Australia it was reported as ' a done deal' at $2...- radu79, on 03/25/2008, -2/+14"Officials justified the intervention by saying the financial system's stability was at risk, and Bear Stearns shareholders were taking a painful blow."
Hmm, so the Fed is rewarding greed associated with high risk investments, and it's OK, because it's for the economy.
Maybe people who lose their money in a casino should also be helped by the Fed, because I see little difference between gambling and doing what Bear Sterns did. - JordanTW90, on 03/25/2008, -1/+4So by shear definition you like the idea of a totalitarian government? I dont.
- ISIfunded911, on 03/25/2008, -0/+10THE story everyone should read about the Fed, Spitzer and Wall Street, by BBC investigative journalist Greg Palast, to understand what really is going on, how much is censored by the corporate media:
http://digg.com/politics/The_REAL_Eliot_Spitzer_St ...
gregpalast.com — While Eliot Spitzer was paying an escort, Ben Bernanke was handing over $200 billion to mortgage bank industry speculators —handing windfalls to the banking predators who have brought two million families to the edge of foreclosure. There was one single, lonely politician who stood in the way of this happening: Eliot Spitzer.
81 diggs so far. - Plopfish, on 03/25/2008, -0/+4Moral Hazard:
http://en.wikipedia.org/wiki/Moral_hazard - CryRightardCry, on 03/25/2008, -1/+2You don't have a problem using the people's money to bail out greedy corporations?
That seems pretty stupid to me.
So you are fine with paying for other people's greed and stupidity?
- radu79, on 03/25/2008, -2/+14"Officials justified the intervention by saying the financial system's stability was at risk, and Bear Stearns shareholders were taking a painful blow."
- Alix7, on 03/25/2008, -3/+2Pwned?
- Cubedude04, on 03/25/2008, -3/+6***** Bear Stearns
- disillusioned, on 03/25/2008, -2/+2Hey, some of us made 27.7% on this news this morning. I just wish I had gotten in at pre-market.
Sigh.
- disillusioned, on 03/25/2008, -2/+2Hey, some of us made 27.7% on this news this morning. I just wish I had gotten in at pre-market.
- SoxSweepAgain, on 03/25/2008, -1/+16Well, I'd rather they shoulder the risk than we, the taxpayers, do it. But it's still sickening that a non-FDIC entity gets this Fed backing even though both entities are nothing but gambling houses - one of whom blew it, big time.
- olenick, on 03/25/2008, -1/+1Worse than sickening -- they should have been forced into bankruptcy then a bankruptcy judge would've marked down the value of the mortgages, possibly allowing the debtors to refinance on more sustainable terms. B/S was bankrupt but essentially received a $29B 10-year loan at 2.5%. I'll guess plenty of bankrupt consumers could be magically not bankrupt on a loan with terms like that. BTW, it was a done-deal (sans some frivolous lawsuits): B/S reneged and was allowed to be the Bush appointees running the Fed. Suppose that it's ok for people to lose their homes but not for banker's to lose theirs.
- Xela21, on 03/26/2008, -0/+1if BS went bankrupt, no one will buy CDOs and our economy will resemble the Great Depression. Foreclosures for homeowners will still happen no matter what; the banks were stupid in lending, but the homeowners were as stupid in accepting those ridiculous terms.
- sigg14, on 03/25/2008, -0/+1rather they shoulder the risk than us? where do you think they are going to get the money from?
- Xela21, on 03/26/2008, -0/+1that money doesn't come from the taxpayers. It comes out of thin air.
- sigg14, on 03/27/2008, -0/+1they print the money out of thin air, then the taxpayers pay the interest on it, and they pay by having the dollar devalued
- olenick, on 03/25/2008, -1/+1Worse than sickening -- they should have been forced into bankruptcy then a bankruptcy judge would've marked down the value of the mortgages, possibly allowing the debtors to refinance on more sustainable terms. B/S was bankrupt but essentially received a $29B 10-year loan at 2.5%. I'll guess plenty of bankrupt consumers could be magically not bankrupt on a loan with terms like that. BTW, it was a done-deal (sans some frivolous lawsuits): B/S reneged and was allowed to be the Bush appointees running the Fed. Suppose that it's ok for people to lose their homes but not for banker's to lose theirs.
- TheLastFreeMan, on 03/25/2008, -3/+4I saw this on the news today. Bears and Stearn want to quintuple the price because the housing market and the stocks went up a little. I hope this is temporary and everything falls further so they'll have to sell to JPMorgan for $1 or 50 cents a share. ***** greedy bastards.
- Stonekeeper, on 03/25/2008, -3/+19This is the same tactic they used when they engineered the great depression: Cause market instability, buy cheap. It's what the rothchilds did when napolean went to war.
- verifex, on 03/25/2008, -0/+2If JPM went through with the $2 a share offer, sure they would get a great value, but they would be effectively devaluing their own investment. Financial companies, especially investment firms, seem to be built on both sound investments and trust. JPM is trying to win the trust part of the investors back, in hopes that when they do get Bear Stearns it will bounce back in price.
It's a gamble, but at the same time with the Fed willing to grease the financial gears here and there, lots of investors might be willing to come back to the table. Only time will tell though. Fear is a hard thing to fight, even with money. - ExplosivesWTC, on 03/25/2008, -3/+29JP Morgan was one of the men who destroyed America and help bring in the Federal Reserve.
- mciampa1214, on 03/25/2008, -7/+4Actually JP Morgan single-handedly saved America by privately bailing out the economy before the Fed was created.
- JordanTW90, on 03/25/2008, -2/+8With $25M in public funds of which he could use to decide which banks made it and which failed. Obviously you know nothing about the Panic of 1907.
- JordanTW90, on 03/25/2008, -1/+4Whoops that should read $35 Million. Equal to $1.115 Billion in today's post-Fed dollars.
- sigg14, on 03/25/2008, -0/+1you need to throw away those public school history books you are getting your information from
- JordanTW90, on 03/25/2008, -2/+8With $25M in public funds of which he could use to decide which banks made it and which failed. Obviously you know nothing about the Panic of 1907.
- mciampa1214, on 03/25/2008, -7/+4Actually JP Morgan single-handedly saved America by privately bailing out the economy before the Fed was created.
- accvrat, on 03/25/2008, -3/+6dont care if ur some great economist, the screw has been turned and my ass hurts...
signed: the poor amaricans... - DestroyFascism, on 03/25/2008, -3/+21I love the way the Fed scams the American taxpayer, its so ugly to watch. The Pigs trough is full of cash even if the workers are bust....Only in America...or Africa...
- TheLastFreeMan, on 03/25/2008, -1/+1tell me more, send shout
- cgoff, on 03/25/2008, -0/+3This isn't just an American thing. Do you have a central bank in your country? Well guess what...
- xerox, on 03/25/2008, -0/+1Their central bank might not be a private corporation though.
- Xela21, on 03/26/2008, -0/+1...and China and Japan, South Asia, and Oceania,.... Laten America, and Europe.....
- Harboggles, on 03/25/2008, -2/+3I have to admit, I bought 125 shares of BSC last week for 5$ and it's already really paid off with the value doubling already...
With JP morgan buying them out and the loans...it's not an unwise investment.- ScottDaMan, on 03/25/2008, -1/+2I got in at $3.25. Awesome news.
- olenick, on 03/25/2008, -0/+2It's not an "investment" any more than a welfare check is "earnings": it's a government giveaway.
- 3ugene, on 03/25/2008, -1/+2We are all paying for it in the long run. That is the problem with America. One person said it this election and for that I am inspired. Until everyone else wakes up, I'll be getting ready to go long term camping when this depression kicks in. Who is coming with me?
- diggopolous, on 03/25/2008, -0/+1I can make a mean mulligun stew stirred over a fire of useless American currency. Count me in. - King of the road.
- LAmandingo, on 03/25/2008, -8/+7Where are all the repukelicans screaming about less government? Oh thats right, they keep their draftdodging mouths shut when they benefit from it. They have an issue with providing healthcare for everyone but they are okay using my tax money for bailouts. Here's the rub. Bear Sterns was an investment bank. They take risks. Its why its called an investment you damn losers.
I want my damn tax money back!! If you were a loser and paid 4 times more for your home then you should have, thats your damn fault. Pay your mortage because you signed the contract!!
Bush got re-elected by a bunch of repukelican bible thumpers that bought homes they couldnt afford but they dont want to hear about the bible saying that you should repay your debts no matter what. Repukelicans have selective religion. They only use the parts they like and ignore the parts they dont like.
The repukelicans jammed a new bankruptcy law that hurt mostly honest hard working people. I hope it causes alot of the repukelicans that supported it alot of problems.- eryximachus, on 03/25/2008, -0/+2What a ridiculous, pointless rant.
The Federal Reserve was created by a democrat President and Congress. Bush certainly follows in Wilson's footsteps, but Republicans have not had much opportunity to fight the Federal Reserve in the past 90 years. Democrats controlled Congress for something like 65 of those years, and by the time Republicans regained some strength - the system was too entrenched to change overnight. Besides, Republicans controlled congress for only 12 years. That is not a long enough time to phase out the Fed, at least without massive economic uncertainty. - Trick07, on 03/25/2008, -0/+1You have to know how stupid you look ranting like that, right?
- eryximachus, on 03/25/2008, -0/+2What a ridiculous, pointless rant.
- prfctsolar, on 03/25/2008, -1/+6This is more of the consolidation of corporate America. Look at Att, Boeing, and many others.It is ridiculus for the Gov. to be financing this J.P. Morgan will recive about 1.2 billion dollars form the Visa IPO.
They are raiding the treasury right in front of your face.
Jeffrey - Billions, on 03/25/2008, -2/+12God, things have gotten really gross. Using tax dollars to assist a successful corporation to bail-out a failed risk-taking investment firm, but 'Medicare' is considered foolish and too costly. The Bush Administration is destroying this country.
- prfctsolar, on 03/25/2008, -1/+1The list is endless of the number of profitable companies that SAM supports.
The whole military industrial complex is a perfect example, or farm subcidise(spell check).
Sam's been loaning the bank 100 billion a month for months. federal sunshine laws should be put in place. jeffrey - Emrtr4, on 03/25/2008, -0/+4JP Morgan stealing Bear Sterns? Bear Sterns is worthless, it has no value? Why the hell should tax payers have to give the shareholders free money? Common stock should NEVER be bailed out by the public unless there was criminal involvement, Bear Sterns was simply run by some of the worst investment bankers around and was little more than a de facto subprime mortgage lender (like country wide).
Also, when a major lending bank went under last year, Bear Sterns was the only banking house that didn't contribute cash liquidity to keep them from going under; what comes around goes around so screw Bear. - Pixelpaws, on 03/25/2008, -1/+3As part of the increased price, JP Morgan is assuming the first $1 billion in risk for Bear Stearns. That is, if the company's value isn't the $30 billion it's currently claimed to be, Morgan's going to lose the first billion before the Fed sees any red ink on its balance sheet. Also, assuming the investments Bear Stearns made eventually recover (as opposed to simply becoming worthless), the Fed stands to make a ton of money on this deal. While some investments may collapse in the short term, this will ultimately prove to provide the government some cash without having to provide a true "bail out" for someone; they're merely providing a loan so they can avoid taking direct responsibility for anything that goes wrong.
- olenick, on 03/25/2008, -0/+2Right news; wrong interpretation. Morgan will throw another $1B in cash that will almost surely be written off. Then the Fed will have some part of their $29B "loan" also written off w/ no way to recapture any of it. If anybody wants me to pay $1B to instantly get $29B more I'd be happy to: it's a giveaway. Morgan is financing the $1B so it's not even cash they're paying out: they probably hope the Fed will come repay that loan too.
- aerwin, on 03/25/2008, -1/+3Even at $10 a share it's still worthless. The only reason it was raised is shareholder greed.
- MrTonic, on 03/25/2008, -2/+2JP Morgan once again robs tax payers from their pennies. Hey... I have an idea, why don't US change it's name to Morgan's States, while we are at it. That would describe more precisely the reality. Oh.. yeah... but now i remember, the public has to have illusion that they have something to say in US. Poor bastards.
- Walmac, on 03/25/2008, -0/+3Do you not realize that if JPM hadn't stepped in with the $2/share offer, that BSC would have filed bankruptcy on Monday leaving shareholders with $0? Equity investors have the LAST claim on assets after debtholders and preferred stockholders. They should be thankful that they get anything, with the prevention of an economic collapse (devaluing the rest of their investments) that would have ensued as a side benefit.
- olenick, on 03/25/2008, -1/+1$0 is the amount investors should have received; the "economic collapse" would have forced the note-holders of the mortgages that caused this to be forcefully renegotiated to the true levels: the value the homes will sell for in a corrected market. The Fed had to choose between greedy investment bankers or stupid homeowners: they forgot they're a quasi-governmental agency and made the wrong choice.
- varun1s, on 03/25/2008, -0/+1Fed Reserve is a private bank owned by JP Morgan, Bank of America, Citi, and other big banks. Fed has the sole monopoly to print money in the US and is only as much federal as Federal Express.
So the news should really be "Fed (JP Morgan et al) helps JP Morgan buy Bear Sterns." - driftwoodtex, on 03/25/2008, -0/+4Here is a prediction. Come next December, we will be reading news stories of how Wall Street financial firms are paying its traders outrageously large bonuses. You know, because they have all done such an excellent job this year...
- yellowcakewalk, on 03/25/2008, -2/+1Privatize the assets, socialize the liabilities. Corporate welfare in a nutshell.
- EvansHall, on 03/25/2008, -1/+5Don't blame me, I voted for Ron Paul!
- sonofashoe, on 03/26/2008, -0/+1BS, the only ib that refused to pitch in to avoid a systemic collapse in the Long Term Capital fiasco is now at the mercy of it's siblings. While the Chairman is getting baked at bridge tournaments.
- abid8740, on 03/26/2008, -0/+1This is a pure and simple moral paradox. What the federal reserve should have done was never touch this and let the market play its self out. If you let banks know that they are to big to fail then it simply promotes excessive risk taking on their end because they will know someone will be there to bail them out if things go bad.
Bernanke grow a spine. - abid8740, on 03/26/2008, -0/+1@all the idiots randomly yelling Ron Paul.
He would have never implemented a gold back dollar. It's simply not possible anymore because theres not enough gold to back up all the money that is floating around in our system. Not to mention that entire overhaul would be one of the most costly endeavorer in history. It would also include one of the most resilient players in the global economy that would veto this idea.
Get a clue, Fiat monetary systems are here to stay there is no practical way to incorporate a gold backed monetary system in a global economy like today (look up Gresham's Law to see what I mean).
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