The Fed cut the discount rate another quarter point, on a Sunday no less. Also announced today, JP Morgan Chase is buying Bear Stearns for $2 a share. Bear (BSC) closed at $30 on Friday, down from $57 on Thursday and a 52-week high of $159.36. The purchase price adds up to $236.2 Million. Their office building is supposedly worth over $1 Billion, alone.
Wall Street Journal reports: "Bear Stearns had a stock-market value of about $3.5 billion as of Friday -- and was worth $20 billion in January 2007. " The Fed advanced JPM $30 Billion against Bear's illiquid assets according to WSJ: "Fed officials wouldn't describe the exact financing terms or assets involved. But if those assets decline in value, the Fed would bear any loss, not J.P. Morgan."
Mortgage rates are unchanged. The dollar has slipped again. Gold is up 2%.
Congratulations, American taxpayer. You just bought a share in Bear Stearns. If the value goes up, you get your money back. If the value falls, you take the hit. It's almost as good as the odds in Vegas, but you don't get a free drink from a cutie in a skimpy skirt.
Even my dog thinks this stinks.
