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The Real Deal Behind the Bear Stearns Deal

Posted by billspaced | 10:00 PM | , , | 0 comments »

Bear Stearns
As most of you who don't live under a rock know, the Fed, along with JPMorgan Chase, kept Bear Stearns solvent. The word is that had the deal to buy BS (get it?) not come along over the weekend, there might have been a financial collapse not seen since 1929.


Here's the real deal behind the deal. It's a long read, but well worth the time. If nothing else, let's learn from this and avoid repeating it.

Bottom line: The Fed did the only thing it could, and it was the right move. There surely will be other macro events and outcomes as a result of the Fed "giving away" money (or Treasury securities, as the case may be), but, as the most well-known economist of the Great Depression has said, "In the long run, we're all dead."

Point being that if the Fed didn't save this one, you might as well have put your head between your knees and kissed your ass goodbye.

It was that scary. And kudos to JP Morgan Chase for stepping up and buying a big bunch of BS. Surely, it was a backroom deal facilitated by the Fed with assurances to JP that they'd be well taken care of in the event anything bad comes their way.

It'll be interesting to see if JP and other big banks go after some of the other banks teetering on the brink of insolvency.

InvestorsInsight : John Mauldin's Outside the Box

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