According to some people, the Fed intervention to fund JP Morgan's takeover of Bear Stearns was necessary to prevent wholesale meltdown of the financial system. Landis82 said that JPM was the only entity capable of rescuing the company. Pabst said the Fed bailout was needed to save counterparties. Well, Bear Stearns stock is now trading at over $8, FOUR TIMES the proposed deal price. This only makes sense if i) the company is liquid after all or ii) someone else - WITHOUT Fed backing - is going to buy the company. No other scenario can explain the stock being four times the bid price. Have you ever heard of a proposed takeover where the stock went up 4 fold above the bid? A free market would not see that happen. In both scenarios, there is clearly no reason for a bailout. Someone in the market views Bear as viable as a going concern, and is willing to value the equity at $1 billion + and purchase the shares at $8 or higher. Therefore within 48 hours the Fed bailout has been incontrovertibly proven by the market to be completely unnecessary. What's more, with them backing such a low price of $2 per share, a 93% discount to the close price from Friday, and with JPM stock adding $12 billion of market cap on the announcement, the Fed has effectively conspired to assist an attempted $750 million stock fraud on BSC shareholders. The Fed has committed an incredibly irresponsible, immoral, and possibly criminal act by backing a rich investment bank in attempted railroading of a takeunder at a ludicrously undervalued price - the bid price was 80% below the value of Bear's office HQ building alone. JP Morgan effectively manipulated the Fed into assisting them in their attempted corporate theft. This has got to be the most corrupt deal and blackest mark in the entire history of the Federal Reserve. So, ET members - do not listen to the doom-mongers who told you BSC was a gonner and $2 was a fair price. If they backed their words with action, they would be short from $2.80 per share and holding a gigantic loser. I posted the truth yesterday and anyone who followed me is up over 100% in 24 hours. Don't let the Polyannas, socialists and doom-merchants stiff you out of your hard-earned risk capital.
How about this scenario. Who stands to lose the most if BSC deal doesn't get done, and goes BK? Who stands to gain the most if it does get done? What is the likelihood these same entities/persons are buying BSC stock in order to garner enough shares to approve the deal with JPM?
The fed is run by retards, that should be obvious. Bear is going to try and block this sale for two dollar and screw up everything.
when the news was announced the other day, i thought it was strange that it was announced during trading hours, and the price actually dropped from 30+ to 2 during trading hours. this is really strange. these types of announcements are usually made after hours. heck, companies can't even release earnings during trading hours.
I suppose bears book value is still > 30, maybe > 40 if they are given reasonable time to unwind. JPM would probably make >4 bln on this deal if it somehow closes. Criminal, indeed
Lol you think I haven't considered that before I bought the stock yesterday? If the only options on the table are the JPM bid or bankruptcy, then the people you mention merely have to bid $2.01 in the open market yesterday and today. After all, sellers would then face a choice of: i) bankrtupcy - they lose 100% ii) JPM deal goes through - they lose 1 cent and the time value of money until the bid closes iii) sell now at $2.01 - they make more than option i) or ii) and have ZERO RISK. So tell me, why wouldn't every single BSC stockholder sell at $2.01 if that were the situation? BSC did not pop 40% on a short-covering rally. It went up 200% in 2 trading days. It went up to four times the bid price. If it is going to be worth $2 in a few weeks or months, why would that happen? Why pay $7, $8 instead of just sitting on the bid at $2.01 if there is genuinely no alternative?
http://www.independent.co.uk/news/b...tearns--what-does-it-mean-for-you-796947.html Bear Stearns - what does it mean for you? By Sean OâGrady, Economics Editor Monday, 17 March 2008 What does the Bear Stearns collapse mean for the world? What does it mean for you? It means, quite simply, that we could be hurtling, when we least expected it, to a slump on a scale similar to that of the 1930s, and that your family may not escape its consequences. Whatâs more, there seems to be very little that world governments can do about it, and that is the most worrying aspect of all. What is happening is bigger than the combined strength of the planetâs most powerful politicians and central bankers, as we have seen over the past six months. Billions upon billions of dollars have been lent to the banking system and yet more billions spent on government stimulus to the economy in the US and elsewhere. To little avail. As with the Great Depression, though, there is also a sense that the orthodox economic frameworks - ideas, forecasting techniques, policies, personalities, imagination, brain power - aren't quite up to the current challenge. If there is a John Maynard Keynes out there who can explain how we arrived here and, more importantly, how we escape the human misery a slump will bring, he has yet to show him or herself. Nor are parallels as remote as the hungry thirties. Japan is still living through what we may be about to encounter; a long post-bubble slump, which in their case started in 1988. Even now, despite the ubiquitous success of their exports and their tidy orderly society, the Japanese economy has been one of the worldâs great basket cases. It has barely grown for two decades, while the nationâs banking and property markets sort themselves out after the crazed boom of the 1980s. Bear Stearns is a signal that something of the same could be about to hit the rest of the developed world. Bear Stearns confirms the terrible truth that the credit crunch isnât some abstruse piece of financial jargon that will have no impact on anyoneâs life outside the City, Wall Street and a few other financial districts. It can crunch you, too. Bear Stearns went down because of a run on the bank â like with our own Northern Rock, except with Bear Stearns there were no retail customers. Really it was a matter of confidence. Bear Stearns, maybe like Northern Rock, was unlucky, because the rumours got around it was in difficulties and the other banks wouldnât lend to it. But then increasingly the bank wonât lend to each other or many of the rest of us either. That means that the business that employs you, that new car loan youâre after or that remortgaging deal you're looking for will all be affected - credit will be much harder and sometime more expensive to obtain. It means your property will be worth less. It means you may lose your job. It means the property market generally will become depressed, with falling values destroying confidence. Falling shares means lower pensions. It means people spending less, and profits and jobs suffering too. And with rising unemployment comes more defaults on mortgages, plummeting prices, another dive in confidence and so on - a vicious circle. If an institution the size of Bear Stearns can be brought low in the downward spiral, so can most of us. So Bear Stearns means a lot. Yes, it is that bad.
I read BSC bonds traded at 60 cents on the dollar last Friday. JPM will honor that debt. If you bought truckloads of that debt it's in your best interest to vote the deal through, regardless of the price. Buy up the float at $7 and change, vote the deal through and make a killing in the bonds.
When will they report earnings for the quarter, why would they not just tell everyone yesterday like they were supposed to?