You are obviously not a student of any past depression. You also missed some testimony. JPM was the ONLY bank offered the opportunity to buy BSC. Wonder why, or you don’t care ? Did you know that Jamie Dimon is a governor of the NY Fed ? Do you know who he is ? Did you think to ask what side of the table he sat on during the “negotiations” ?
Even that idiot Dodd got it right - What the Fed is doing is privatizing the profits, socializing the losses. We are living under a fascist economy, and it won’t change when the next administration takes office. Both the Republicans and the Dems are in it up to their eyeballs.
And yes, option 2 is far preferable IF it means we can finally get the transparency that is so necessary in our financial system. Don’t you care about life, liberty and the pursuit of happiness ? Or are you more interested in your comfortable existence where you eat your hamburger every nite and fall asleep to American Idol ? As the Founders said, if we trade freedom for security, we are lost. Your post is proof of that mentality - just let the Fed hide the bad stuff so you don’t have to bother your pretty little head over it.
And finally, the average American’s retirement and everything else they hold as an asset is already under assault. Inflation is heating up in the energy and commodity sectors, house prices are dropping like crazy, and the demographics of the boomers will ensure the market doesn’t recover in the next 10 years or more, unless you favor a greatly inflated immigration in years to come. You can’t trade the market because it is so manipulated by the Fed and other major institutional insiders that it has become quite irrational. Explain Tuesday’s 400 pt rally. What fundamentals or news showed up on Monday or Tuesday to justify such a thing ? Social Security and Medicare are a joke, especially after this year when every one of the Presidential candidates favors amnesty and giving SS and Medicare to the illegals.
No, unless we get back to no corporate welfare, allow those highly leveraged individuals and institutions to fail and take their losses, and start promoting honesty and ethical action, there is no USA. We are no better than the USSR. Welcome to socialism, comrade.
My house has already dropped maybe 10%, my retirement is as secure as I can make it because I’ve paid attention to the economy, I have no debt because I don’t live above my means, and I know we would suffer short term pain but long term we wold be so much better off.
Short term pain, long term gain. Instead, just like Japan we’ll have short term “stability” with maximum long term pain.
If there were other institutions that were willing to step up and commit to a deal on such short notice, why haven’t any of them piped up and said so? At least a couple of other institutions had brief discussions with the Fed about stepping in, but backed off (reportedly they only wanted certain plum pieces of Bear).
The senior execs of every financial institution on the planet that’s even a tenth of the size needed to handle an acquisition like this knew full well by Friday morning that the Fed was seeking a buyer to do an emergency deal to rescue Bear. It’s not like any of them don’t know how to contact the Fed to express interest. Some of them certainly did put in inquiries, but nobody offered to do a deal involving the whole Bear Stearns entity, to be publicly announced by 8PM Sunday evening, which was the absolute time limit. There simply wasn’t time to entertain complicated bids that involved parceling off different pieces of Bear, taking multiple bids for each part, parceling out liability for corporate level actions to part-buyers, etc.
Nobody should be complaining about the Fed’s deal with JPM. It was the only deal available, and it had to be done, because 99.9% of Americans don’t want to have their financial security devastated in hopes that it will bring about some ideologically pure financial system.
There ought to be a LOT more focus on how Bear got itself into this condition in the first place. The plan to give the Fed some regulatory authority over broker-dealers is a step towards preventing a repeat of this. But all the senior executives and board members of Bear Stearns should be under intense criminal investigation right now. At the very least, there was a lot of gross negligence on their part. These schmoozing, golfing, bridge-playing big-wigs only understand one punishment, and that’s getting locked up. The message needs to be sent loud and clear that if you negligently cause the failure of a large financial institution to a degree that puts other institutions and whole countries’ economies at risk, that you can’t assume the worst that will happen is you get fired and lose the value of your stock and stock options. The prospect of playing golf/bridge full time instead of just half the time isn’t scary enough to curb their misdeeds.