Bear Stearns: From $170 to $2 in a little over a year
We now know where the Bernanke Put lies for the investment banks: at $2 a share. I'll have to do a little research, but this devastating fall seems to be faster than most of the fly-by-night internet companies in the 2000 dot-com crash. And this is an 80+ year old Wall Street institution.
As part of the transaction, the Federal Reserve, which engineered last week's emergency bailout of Bear, will provide up to $30 billion of Bear Stearns' less liquid assets. "JPMorgan Chase stands behind Bear Stearns," said Jamie Dimon, chairman and chief executive of JPMorgan. "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk. We welcome their clients, counterparties, and employees to our firm, and we are glad to be their partner."
Congratulations Bear Stearns' shareholders. The Plunge Protection Team has stepped in and backstopped JP Morgan to make sure you still have a little value left in those shares. I bet that isn't giving BSC shareholders much comfort this weekend as they wait to see the decimation in their accounts in the morning. Of course, if you still hold shares of BSC after all the very public warning signs, we can't say we have much sympathy for you. Most other companies would have been allowed to go out of business, so you should be thankful for the $2 the PPT let you keep.
Meanwhile, the rest of us who are crazy enough to keep some of our assets in US Dollars are also seeing our account decimated by the socialization of downside risk and the mad money printing going on. The dollar is making fresh lows against Gold, the Euro, and many other currencies.
In other news, I'm sorry about the massive spam attack this site had while I was on my business trip. I've installed some spam trapping software, so hopefully we'll be fine until the new site is up.
