JP Morgan is buying Bear Stearns at the bargain basement price of $2 per share.
The Federal Reserve and the U.S. government swiftly approved the all-stock buyout, showing the urgency of completing the deal before world markets opened. The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation’s fifth-largest investment bank into trouble.
Ah, the glories of the free market. From some quarters, we hear an awful lot about the infallibility of the market, harsh as it may be, until something like this comes along where there is an entity that’s “too big to fail.” Then it’s time to socialize the risk and privatize the profits.
The hell of it is that the utter collapse of a big investment bank probably would cause more pain than will having taxpayers fund a safety net or bailout. On the flip-side, letting a bunch of ordinary folks go under when they bought into sales pitches for sketchy mortgages doesn’t hurt the rest of us severely enough to compel the government to get involved. At least, however, I would ask for an acknowledgment from the free market purists that it’s beneficial for the government to interfere with the market from time to time. With respect to where and when the government gets involved, as the joke goes, “we’re just haggling over the price.”
Update Larry Kramer (a CNBC Wall Street media personality) was on MSNBC’s “Morning Joe” this morning and, in practically the same breath and without a sense of irony, spoke with apparent approval of the federal government guaranteeing some of the crap Bear Stearns loans as part of the JPM buyout, then saying that the government shouldn’t “overreact” and regulate” because “the market should be allowed to work.” Nobody jumped his shit over it either.
Who expects Joe Scarborough of all people to jump a guest’s shit over such transparent hypocrisy? He’s former Republican Congressman.
Market discipline is for people who don’t contribute to your election campaigns. Those who do are entitled to as much state intervention as they like, as long as they mouth Milton Friedman-esque platitudes.
I’m not hearing any neo-con a-holes screaming
“bailouts are socialism! let the free markets rule! economic darwinism”
I guess they all might lose their jobs, their homes, their expensive cars if the economy crashes and burns?
I’m poor, out of work, cant find a job, going to stand out in front of the corner supermarket, and beg “pennies for a veteran?” with my cardboard/Sharpie sign.
and wait for the 2nd “Great Depression”, and WW3, started by another madman warhero with a short fuse, volatile temper, and trophy wife.
its 1939 all over again. we already invaded (iraq)poland. now lets start another war with Iran (red army?).
a wheelbarrow full of dollars to buy a tank of gas, and a loaf of bread. blame those darned foreign trade treaties.
I’m already building my own bunker- if McCain gets elected Chancellor- I mean President.