Bear Stearns possible collapse

It appears options traders are pointing to a possible collapse.

Bear Stearns got emergency funding today from JPMorgan Chase & Co. and the New York Federal Reserve. The New York Fed agreed to provide financing through JPMorgan for up to 28 days, the bank said in a statement

It's down 40% but I want to know more about the Fed bailing out these financial institutions. Sure seems like it's going to dump it all on the US taxpayer.

Subject Meta: 

Forum Categories: 

JP Morgan to buy Bear Stearns

article

at $2 dollars a share!

That's unreal! all over the weekend to avoid bankruptcy and JP Morgan isn't responsible for all of the bad debt!

A collapse of Bear Stearns could have created a further crisis of confidence in world financial markets amid a deepening credit crunch. JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of what the investment bank was worth just 16 days ago

and the Fed set this up!

Good god. I hope others comment on what this really means.

You must have Javascript enabled to use this form.

Bear Stearns possible

Well, the good news is, Bear Sterns shareholders were virtually wiped out. They are getting less than 2% of what their shares were worth at the company's peak.

The not so good news is this quote:

The Fed will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

I would like to know what risk the taxpayers' central bank signed up for here. There may be none. The Fed may simply be providing liquidity until the debts are unwound. Tough to say since the article gives no specifics. I am sure we will find out lots more in the next few days.

I would also like to remind everyone that we are maybe 30% of the way through the bursting of the housing bubble.

You must have Javascript enabled to use this form.

update us

That's exactly what I'm wondering about, how are they dealing with that bad debt and is it being dumped onto the taxpayer, through some ponzi scheme? I mean using bad debt against bad debt is what I've read (mortgage securities against fed funds) so I'm confused. If you find out details I hope you post about it.

I'm watching DOW futures they are already at -240 but last time this was building up the Fed did an emergency surprise rate cut to circumvent a major market correction.

So, as your "scenario 3" I'm wondering if we're looking at the big one and there are no more tricks.

I read it was 1% of the value just 16 days ago. God lord help anyone if they had all of it in Bear Sterns.

You must have Javascript enabled to use this form.