From AP:
"JPMorgan Chase said Sunday it will acquire rival Bear Stearns for a bargain-basement $236.2 million -- or $2 a share -- a stunning collapse for one of the world's largest and most storied investment banks".
Sunday, March 16, 2008
Two Buck Bear
Posted by Harriet at 9:29 PM
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13 comments:
Particularly bizarre given that Bear's office building alone is worth a billion dollars. That's prime real estate seventy-five percent off. I can't wait to see what that does to the comps...
gruntled,
The $2 price must be reflecting the enormous liabilities that Bear's trading in mortgage securities has created, which JPM is assuming-- i.e., it is an issue with net assets and doesn't mean the value of the building has fallen.
Yeah, sorry, I should have made it clear my tongue was firmly i cheek.
Interesting take from Kudlow.
"Paulson and Bernanke have done exactly the right thing. It was a run on the bank. The Fed stopped it right there. No banking crisis".
Particularly bizarre given that Bear's office building alone is worth a billion dollars
A GREAT bit of wisdom (one of the only ones) from my quirky brother:
It's not what it's worth, it's what you can get for it.
PARTICULARLY true of real estate, as MILLIONS of home owners nationwide are finding out...
The news says 30% of company was owned by employees. If someone had 1 million in its stock its now worth 40,000.
John, considering Bear payed out 6 billion in bonuses in January 08, I think those employees preferred the buyout to bankruptcy - where they would have had to give money back!
6 billion on bonuses for a company with a net worth of -30 billion.
And the taxpayers get to foot the bill...
doug,
Listening to Bloomberg this morning -
(An incensesed) Jim Rogers was just on Bloomberg and said his suspicions were that Bernanke wanted to make sure his friends could buy their Maseratis.
``The Fed is throwing the dollar out of the window,'' said Jim Rogers, chairman of Rogers Holdings, in a Bloomberg Television interview from Singapore. ``Everyone listening should get out of the dollar,'' said Rogers, who predicted the start of the commodities rally in 1999.
harriet said:
"``Everyone listening should get out of the dollar,'' said Rogers,"
... and into something with real intrinsic value ... such as real estate.
Someone explain what the Fed did to bailout BearStearns and how are the taxpayers getting screwed by what happened? I missed the story just heard the complaints
I didn't listen to Rogers today, but about a month back, he asked people to move their assets to Swiss Franc.
stealth4,
In a nutshell:
a) Federal Reserve provided JPMorgan with x amount of cash, in the form of a loan-I can't remember the amount, and I'm too lazy to look it up right now.
b) JPMorgan struck a deal with Bear Stearns to buy their shares for $2 per. Notice on Fri. they were trading something like $60 per.
c) Using the money the Fed lent to them JPMorgan now owns Bear
d) JP is forcing Bear to liquidate.
So in sum, Fed bailed out JPMorgan to buy Bear.
It is a mucked up system out there.
Well how does this effect me. Well instead of using JPMorgans money to buy Bear they use Fed money. This in turn frees up JPMorgan to invest it's money (that would have bought bear) into other things. What are those other things . . . . if you guessed commodities you were right.
This in allows JP to use its funds to buy more commodities to make more money, which of course drives up food/gas/gold costs.
So just think, everytime you go to the store and see higher food prices, say thanks to the Fed for bailing out JP, and causing in some small part higher food prices.
Real Estate, as we are finding out now is HIGHLY illiquid, and has HIGH transaction costs.
If you want to get out of the dollar, put it in gold, VERY liquid, and VERY LOW transaction costs.
gte811i
Thanks!
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