Filed under: Economy, United States — Michael van der Galien, Editor-in-Chief on March 17, 2008 @ 1:00 pm CET
JPMorgan Chase has announced, in what’s a sign that the US economy is having some very serious problems, that it’s buying Bear Stearns for $2 a share. This while Bear Stearns “recently valued at well over $100 a share, and selling for over $50 as recently as last Thursday.”
Of course all of this doesn’t automatically mean that Americans should prepare for the biggest recession in decades, but it’s a very real problem nonetheless and is likely to be in the advantage of the Democratic nominee (for president).
Meanwhile, it seems that the Fed is willing to do whatever it takes to prevent companies such as Bear Stearns from going broke. As Paul Krugman writes, “the big bailout is coming.” The question then becomes, as Krugman points out, “[w]hen the feds do bail out the financial system, what will they do to ensure that they aren’t also bailing out the people who got us into this mess?”
The problem with such an approach is that a bailout won’t work if you’re not willing to ‘bail out’ those who “got us into this mess.” Why? Because everyone is basically involved in one way or another. All the ‘victims’ at least. The companies, yes, but also your average citizen who took on a mortgage he or she couldn’t afford. These people too should have known better.
Share and Enjoy:
These icons link to social bookmarking sites where readers can share and discover new web pages.
RSS feed for comments on this post. TrackBack URL
PoliGazette Comments Policy
PoliGazette encourages comments from all viewpoints, especially those that disagree.
Comments submitted must, however, adhere to the following standards. Comments that violate
these standards may be edited or deleted without notice at the sole discretion of the editors.
Commenters who repeatedly or egregiously violate these standards or who attempt to argue
publicly with editors regarding the comments
policy may be banned from commenting further.
(1) Comments should address the substantive content of the post. Comments that repeatedly or
willfully misrepresent the content of the post or of others' comments are not welcome. Comments that
respond to something other than which the contributor or commenter may have said are irrelevant and should
not be posted.
(2) Comments should avoid use of vulgar language as well as racial, ethnic, or religious slurs.
(3) Comments should not personally attack the character, personal integrity, or professional
reputation of any PoliGazette contributor or of other commenters.
(4) Comments should reflect the contributions of the commenters themselves and should not
include extensive cut-and-paste reproductions of others' words except insofar as necessary to supplement
the commenter's own arguments. Link spam, trackback spam, and propaganda spam will be instantly deleted.
(5) Public figures are considered open to all substantive criticism of their policies and statements.
Comments that present false factual information about public figures (i.e. "Obama is a Muslim) or
that attack public figures by attacking their families are not welcome. Comments that merely repeat
slogans for or against a candidate without engaging in substantive comment are not welcome.
Questions or challenges to these policies or their application should be directed to the editors
by email.
1 Jay_C
March 17, 2008 @ 1:34 pm CETThis is really more of a fire sale than a bailout. I read elsewhere that today may be the closest we come to a black monday redux?
2 Bob
March 17, 2008 @ 2:11 pm CETAnd history repeats itself..again and again.
JP Morgan has surely come a long way since the days of trying to overthrow FDR…or have they?
3 Jay_C
March 17, 2008 @ 3:14 pm CETI for one say, good call Bob!
Although I wouldn’t expect much more support on your assessment.
4 Jay_C
March 17, 2008 @ 5:00 pm CETHowever, I would not be surprised if we start seeing this happening with other banks as well. (Maybe not right away, but months or a year or so) If that is the case, then yes, it will be a bailout trend. In that case, it will then appear to be more of a systemic crisis, confidence in the FED will be almost nil and if the bailout trend starts continues, then we should be looking for very tough times ahead. (look for signs from companies like Carlyle Capital Corporation, UBS, Merrill Lynch, Lehman Brothers, JPMorgan Chase, ING, Deutsche Bank, Credit Suisse, Citigroup, BNP Paribas and Bank of America). You know, the big banks..
5 Jay_C
March 17, 2008 @ 5:44 pm CETAnd if this does end up being a bailout trend, to add insult to injury, the FED will esentially be protecting banks that attempted to enrich themselves through wild speculative bets on dubious toxic investments which are now / will become utterly worthless.
6 jpmorgan chase
March 17, 2008 @ 8:02 pm CET[…] buy Bear Stearns Cos . …JP Morgan offers 2/share for Bear Stearns Business Standardmoney.cnn.comBear Stearns Bought By JPMorgan Chase - PoliGazetteJPMorgan Chase has announced, in what??sa sign that the US economy is having some very serious […]