Double WOW!

[dvcgirl]

JPMorgan just purchased Bear Stearns for **$2** a share. That stock opened around $60 on Friday, closed down about 50% to $30 or so and was purchased for 250 million dollars today. Absolutely incredible....

http://biz.yahoo.com/ap/080316/jpmorgan_bear_stearns.html

 

[dvcgirl]

Just wanted to add that Bear was trading above $150 a share in May. I can't even begin to comprehend the amount of wealth completely wiped off the table in this deal.....

 

[jeankeri]

Thanks for the link dvcgirl. When I see you've started a thread I know I'm going to learn something. This time, I kind of wish I didn't. What a mess- tomorrow's sure to be interesting...

 

[tinaluis]

Pretty scary stuff. Tomorrow's going to be a roller coaster ride for sure. Hopefully, the Fed cutting by a quarter point will not be seen as an act of desperation and will help to stabilize things.

 

[dvcgirl]

Well, all that I can say is don't panic. The markets are really hard to predict these day. It could be very ugly, or there could be a a feeling that the Fed will do *whatever* it takes to keep keep the markets functioning and not crashing. That could boost confidence and keep the markets from positively plunging.

There is a *lot* of cash on the sidelines looking for the bottom....if the market thinks that tomorrow may be that day, we could see a big swing to the upside. If only I had a crystal ball

Personally, I just don't think that this is over. The Bear situation will scare an awful lot of wealthy people. Many will want to move more money into cash as many of their buddies lost a *fortune* if they owned Bear.

Even with the Fed and Treasury very involved, a chain reaction could get started that will be difficult to stop. We'll just have to wait and see.

I'm much more concerned about how far the government will go and the measures that they'll take to keep things under control. The impact on the dollar and inflation could be worse than the markets taking a significant dive. It's just too soon to know.....

 

[DisneyMomJen]

I know people who work there. I am worried about them not only since there is a good chance that they will lose their jobs, but at least part of their 401k's have to be tied up in this companies stock which is pretty much worthless now. 30% of this stock is owned by the employees. I just can't imagine.

 

[punkin]

Imagine...it really is as bad as all that, if not worse.

 

[DisneyMomJen]

I agree

 

[madge]

I wonder how this will all translate down to mortgage interest rates, bank account interest rates, etc.

Because I know that what I'm reading is important. I have to admit, I don't really understand the overall impact for my bank account, in Kentucky. It's a lot of information and I find myself overwhelmed when I try to understand what the articles say.

 

[punkin]

Can you say "bank run" boys and girls?

 

[dvcgirl]

Joe Lewis, the famous British currency trading billion quietly built a 7% stake in Bear as of Sept 2007. By Friday, he had lost 800 million dollars. Now he's lost much more.

As of Friday there was speculation that he was going to have to begin selling off other assets to meet margin calls he was getting.....now he'll get more margin calls.....as will many others like him, and so on, and so on.

And then there's speculation about the *other* investment banks and big banks that are also in trouble, and what *their* books must look like if Bear was valued at 3.5 billion on Friday and 256 million on Sunday.

This is how a crash begins....

Here's hoping that calmer heads prevail....

 

[punkin]

I am still in shock. If I was against any sort of bailout before, I am not anymore. This country cannot run without credit.

 

[dvcgirl]

I wonder how this will all translate down to mortgage interest rates, bank account interest rates, etc.

Because I know that what I'm reading is important. I have to admit, I don't really understand the overall impact for my bank account, in Kentucky. It's a lot of information and I find myself overwhelmed when I try to understand what the articles say.

There's so much fear out there right now, I think initially mortgage rates will hover where they are or go up, despite what the Fed does.

This is going to take awhile to settle down. We're witnessing what happens when too little money gets far too leveraged and chases risky yield. This is the Great Credit Unwind.

There is going to be big government intervention coming....and soon. Much more than what we've seen.

 

[snowbunny]

Can you say "bank run" boys and girls?

yes indeed...and I see Helicopter Ben has decided to print some more money, cough - I mean - lower interest rates again.

 

[snowbunny]

There is going to be big government intervention coming....and soon. Much more than what we've seen.

No doubt....privatize the profits, socialize the losses....stick it to the taxpayer

 

[POOHDRMR]

My cousin works there-I am praying for him and his family to be able to get through this okay.They are in the middle of having a house built and I know this will be a hard time for them.

 

[punkin]

Am I understanding it correctly? Is the Fed actually financing the JP Morgan buyout?

 

[PolyHereWeCome]

I know people who work there. I am worried about them not only since there is a good chance that they will lose their jobs, but at least part of their 401k's have to be tied up in this companies stock which is pretty much worthless now. 30% of this stock is owned by the employees. I just can't imagine.

This was my 1st thought. Enron left its employees 401k plans with very little. Seems the innocent workers get really hard hit.

 

[dvcgirl]

Am I understanding it correctly? Is the Fed actually financing the JP Morgan buyout?

Yes, that is how I'm reading it. The Fed is playing backstop right now for Wall Street....let's hope they can hold things together this week. The question is, for how many other banks can they take on this role?

How far does the dollar fall this week?

Nikkei is down 515 now

Dow futures down 225.

Tomorrow is going to be a really, really interesting day.

 

[punkin]

OK, it seems that Bear Stearns is one of the big players in the repo and derivatives markets and had the Fed not arranged this "buyout" the entire market was in danger of collapsing.