It's a Bear Stearns Market!!!! Look Out!!!!!
Ok. Pretty weird. I wake up on Monday and find out that Bear Stearns has been bought by JP Morgan for $2 per share. Bear Stearns has been a top notch investment banking firm for 85 years. Last year, its stock was selling at $172 per share. This year, it had been selling for $30 per share. Now, it is sold for $2 per share and it seems like the deal just popped up overnight.
JP Morgan has, of course, offered to guarantee all trading until the Bear Stearns shareholders approve the deal. What does that mean? Guarantee. Sounds like Mr. Potter calling Harry Bailey during the bank run to say that he would guarantee all the accounts at the Savings and Loan. Wow. What's really going on?
Then, the Fed announces that it has cut the emergency lending rate to 3.25%, dropping it a quarter of a point even before it's regularly scheduled meeting. The Fed never does that. But it has now. Rumor has it that they will drop the emergency lending rate to 2.0% today. Sniff the air........ The smell of a financial meltdown is wafting down the corridors of the Fed. People are frightened, and they are frightened about what could happen. The Fed has been frightened into dropping rates even before their meeting. Their immediate and unparalleled action doesn't quell my concerns, it only heightens them.
People have made casual comments about the crash of '29, but for the first time, I think that there is some real fear that the US Economy may nosedive from its already compromised position. I hope I'm wrong. I pray that I'm wrong. But isn't it a little weird that a company announces that it has accepted a buyout offer at $2 per share and their workers showed up for work on Monday morning to find out about the sale when the rest of us did? Deals like this traditionally take a long time to work out. A fire sale price of a company that survived the Great Depression being announced on Monday morning (taking everyone, including Bear Stearn employees, by surprise) smacks of desperation.
Hoping I'm Wrong,
Blawgerman
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1 comments:
Interesting the Fed bails out one of the largest investment banks in the nation while consumers have their homesteads gaveled off at the auction - and the only thing you cant modify in a BK is the primary residence mortgage.
Who do you think has a really good lobby?
I've heard the we really may be in for any depression like '29. It seems a perfect storm's a brewin...
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