Bear Stearns less valuable than A-Rod
If you follow financial news at all, you already know that the sky is falling, signaled in particular by Bear Stearns being sold for $2 a share to J.P. Morgan Chase. This picture sums it up cleverly:
To put that in perspective, that deal according to this NYT story values the company at $270 million; which is $5 million less than A-Rod will be paid to play baseball. Take into account also that Bear Stearns’ headquarters on Madison Avenue has been valued at $1.2 billion, and it becomes clear that Bear Stearns is apparently worth a negative billion, and that J.P. Morgan is being paid in real estate to deal with the toxic waste on Bear’s balance sheet. But it gets better for J.P. Morgan, because the Fed has stepped in to assume the risk on $30
As the WSJ piece today puts it, this is a less a bailout than a firewall:
Former Treasury Secretary Robert Rubin last week described the situation as “uncharted waters,” a view echoed privately by top government officials. Those officials have been scrambling to come up with new tools because the old ones aren’t suited for this 21st-century crisis, in which financial innovation has rendered many institutions not “too big too fail,” but “too interconnected to be allowed to fail suddenly.”
A good question to ask is whether the Fed gets to keep any profit this $30 million might by some miracle generate. Or do we taxpayers get nothing but screwed out of this?
My money’s on screwed. A bank as monolithic as J. P. Morgan holds stock in the Fed, I’m sure. So, if for some reason the $30m worth the crud the Fed’s holding were to perform, the profits would become stock dividends. The Fed is private, after all.
We taxpayers will continue to serve our proper function as payment makers on the ever increasing interest on loans made to the Treasury to print money.
As Pound wrote, “Usura is a murrain.”
Man, I sound like a Ron–Paulite!
Comment by EBM — March 17, 2008 @ 6:04 pm
30 billion, not million.
Slight difference.
http://www.google.com/search?hl=en&q=30+billion+bear+stearns
Comment by 30 billion — March 17, 2008 @ 7:47 pm
A postscript to my last comment:
It appears that the Bear Stearns buyout–bailout was orchestrated to keep the latter out of receivership, because the higher-ups just “earned” several billions in bonuses which they’d have to forfeit should Bear Stearns be sent into bankruptcy.
Comment by EBM — March 17, 2008 @ 8:35 pm
Where’s your FREE MARKET now, bitches?
Like they say, Keyensism for the rich and Free Market for the poor.
Comment by flighty — March 18, 2008 @ 10:31 am