Bear Stearns

Trying to figure out what happened, what the fuck is going on. Bear Stearns is trading at $30 on Friday, then over the weekend JP Morgan buys it for $236 million.

As the Financial Times puts it:

[T]he deal, which values Bear at just $2 per share, compared with the $169 hit in January last year and the $30 reached on Friday, will wipe out most of the value of the investments of Bear’s shareholders.

And the Fed is guaranteeing up to $30 billion of Bear Stearns’s outstanding paper. What gives?

One thought on “Bear Stearns

  1. As usual, the Onion nails it:

    JPMorgan Chase Acquires Bear Stearns In Tedious-To-Read News Article

    NEW YORK—As a volatile market reacts to news of the Bear Stearns fire-sale deal with a surge in stock prices but reduced bond yield, officers from JPMorgan Chase announced Monday that they were close to finalizing plans to purchase the securities giant in an incredibly complex series of financial maneuvers and obscure legal jargon that can only be described in the most mind-numbingly dense and unreadable way.

    They go on to add:

    “Critics on the equity side have no economic standing because the deal valuation is based on intrinsic pricing models,” said analyst Jack Pinard, only further bogging down the news for anyone who might be remotely interested in grasping what the fuck is going on.

    Exactly what I said! What the fuck is going on?

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