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The Demise of Bear Stearns – A Eulogy

by TheFalcon on March 17, 2008

Ah the venerable Bear Stearns….

Founded in 1923…Pronounced DOA Sunday, March 16th, 2008 after 85 wonderful years.

 

Stock Price Action Highlights:

52 Week High $160.00
Nov 5, 2007 $100.00
Jan 1, 2008 $ 85.00
Mon last week $ 62.00
Fri last week 30 bucks (change in vernacular intentional)
Sunday 2 Bits and holding according to JP Morgan (I think this offer amounts to furniture, equipment and the painting hanging over the CEO’s credenza…and the expresso machine)

But the CEO said everything was fine last week. Funny, …I didn’t ask. I wonder if those statements will appear in future lawsuits? Ah but I wax rhetorical.

She once soared with the eagles but now sleeps with the fishes. Oh how the mighty have fallen! A few seconds of silence (and only a few), pour out a little liquor (the cheap stuff)….and a little dancing on the grave. Say hello to Lou Kabrotzy.

Rumor has it that Lehman is next. Oh the humanity!

$268 Million for a company that had a market value measured in the 10’s of billions of dollars.

Remember Citibank’s rescue plan from late last year that went bust. Creating a $200B fund to buy all the toilet….junk paper and thereby establish value…since it had no value? Remember how that plan came to nothing? Does that $200B number ring a bell? It should…because that is the same number the Fed has made available with its new “Term Securities Facility” which they added to the previous “Term Auction Facility”. So instead of creating a fund from private investors to buy the crap (because no sane person or institution was interested), the fed has stepped up and said, give me your tired, your weary, your worthless paper and we will exchange it for cash and/or treasury debt (you know…cash or something you can sell for cash…for now). Since I know you have been watching the dollar whose behavior over the last few years bears a striking resemblance to a cast iron anchor tossed into a large body of water, I’m not sure how much value a US dollar give away is to the banks and wall street brokerages. Wouldn’t it be something if they said, “We appreciate the offer Federal Reserve but…(with a straight but somewhat sheepish face) could you give it to us in Euro’s or …. gold? Didn’t think so, but Just thought we’d ask”

I don’t even have the strength to go exploring all of the ramifications of this brazen act. Moral hazard, fraud, etc. What incentive do these folks have to behave responsibly? (there I go with the rhetorical questions again) So now we the people own all this crap and in exchange we have given away cash and treasuries so that it’s a double whammy. Maybe in the end the jokes on them since even the treasuries and cash are losing their value.

– The Falcon

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