The Fed’s Forced Marriage of Bear Stearns and J.P. Morgan
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The news that J.P. Morgan bought investment house giant Bear Stearns for just $236 million, or $2 a share, sent tremors through financial markets around the world today. This is company whose stock was worth almost one hundred times as much a year ago. Its building alone is valued at close to $1 billion, which suggests that all the other assets of this 85 year-old investment bank had a negative value – Bear Stearns liabilities exceed its assets.
Further confirming this view is the fact that the Fed apparently had to make guarantees to J.P. Morgan of $30 billion in order to get the bank to take Bear Stearns even at this price. That suggests the bank had a lot of real garbage on its books. The markets are right to be worried. Of course with the $8 trillion housing bubble in full meltdown, there will undoubtedly be much more bad news for the banks in the months ahead.
One person who does not have to worry is James Cayne, the recently departed chief executive of Bear Stearns. According to the New York Times, he walked with $232 million in compensation over the period from 1993 to 2006. This is just another example of how the global economy rewards extraordinary talent.
Emphasis mine. Do you know what he did the week before the buy-out? Playing in a card tournament.
Fucking robber barons.
And for your reassurance:
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President Bush gave assurances this morning that financial markets are continuing to function, adding that the U.S. is “on top of the situation.”
What he isn’t telling you: it’s the missionary position.
Let us not forget that your CEO-President has a history of bankrupting companies that he has run…only to be rescued by friends of Daddy. The only “friend of Daddy” big enough to step in is the IMF/World Bank. When the dollar tanks and there is runaway inflation, they will step in. Take a look at Jamaica for the effects.