From the the London Guardian moments ago:
The cash-strapped Wall Street investment bank Bear Stearns was rescued from the brink of collapse tonight through a takeover by rival JP Morgan Chase for the rock-bottom price of $236m.Asian nations hold massive quantities of dollars. We'll update this post when news on today's Asian market sentiment becomes clear.
After a weekend of frenetic negotiations, Bear Stearns' board approved a stock-for-stock buyout at a valuation of just $2 per share. In a sign of the desperation of Bear Stearns' plight, the deal is at a 94% discount to the bank's closing share price of $30 on Friday night.
"The past week has been an incredibly difficult time for Bear Stearns," said the 85-year-old firm's chief executive Alan Schwartz.
"This transaction represents the best outcome for all of our constituencies based upon the current circumstances."
Before the credit crunch set in, Bear Stearns had a market capitalisation of more than $140bn. But the firm was hit by an evaporation in confidence culminating in a bank run by clients last week.
Without a buyout, Bear Stearns would almost certainly have been forced to declare itself bankrupt. Senior management rushed to negotiate a takeover before the start of the week's trading on Asian markets to avert mass withdrawals of funds by clients in Japan, China and elsewhere.
Dow Jones Market Watch also reports that the Fed has cut the funds rate to 3%, to inject more cheap money into the failing economy.
Gold is now trading at $1027 on the international spot market as we enter this data, BTW... up twenty bucks an ounce from only three hours ago. Still a bargain, in our view, at least in the long run.
4 comments:
The Dow Jones Industrial Average is off about 250 points at 11,700 in Tokyo where it is Monday morning.
It's been drifting steadily down. The Nikkei is off more than that.
Not much of a fall, yet. I hope tomorrow is not the big day, when NY opens.
Time for bed.
I have a million in Godfrey Gold Certificates for sale. They are backed by the internationally famous Godfrey High Tech Rec Center.
Mind you this is not a panic sale, but I will let them go for $1.98 and a day pass on the world famous Godfrey ice climbing tower.
Gee, I've been reading papers around the country on line this morning about the Bear Stearns collapse, the government bail out, etc., and gosh darn it, I couldn't find a single Republican Congressman talking about the need to cut government regulations of the banking and financial industries because they are inhibiting growth, and the market will take care of things much better on its own.
And I could not find many on Wall Street railing against the Fed pumping billions into the credit markets and bailing out Bear Stearns so it could be sold, even for a pittance, as an inexcusable government give-away.
How come welfare for the rich is OK, but welfare for Americans struggling at the bottom of the economy is an inexcusable waste of the taxpayers money?
When Sir Francis Drake was taking Spanish vessels on the high seas an bringing the loot back to England, someone asked him if he wasn't worried he'd be hanged for a pirate. He laughed and said "Do you know any who be pirates for millions?"
He got that right. Steal from a cash drawer at McDonalds and the full weight of the law will come down on you. Take hundreds of millions in performance bonuses as an exec at a Bear Stearns as you bankrupt the company and its investors, and you'll be asked to give speeches at business schools about modern management. And be invited to be a Bush Pioneer yet again.
Just caught a good one on CNBC:
The Yankees paid more for A-Rod than JP Morgan paid for Bear Stearns.
heheheh
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