That was waaaay to close for me.
Looks like we were all standing on the edge of a cliff for a moment and fortunately we have taken a step back. I am talking about the collapse of Bear Stearns that ended in the buyout by J.P. Morgan over the weekend. The actions of the Federal Government showed they are clearly treating this as in impending collapse of the US credit markets. They obviously felt a Bear Stearns collapse would have taken the whole economy down with it. Just look at the numbers....
- Bear Stearns was worth $20 Billion in January.
- Their New York headquarters building alone is worth $8 per share.
- They were bailed out by J.P. Morgan for an incredible $2/share
- Total value of the deal was only $236 Million
- Remember they were worth $20 Billion two months ago ... that's just under 12 cents on the dollar ... a "fire sale" in anyone's book.
- AND the Feds threw in an additional $30 Billion in guarantees to lower the risk of the deal.
- Both President Bush and Secretary Paulson signed off on this deal. [Historical Note: The 1998 bailout of Long Term Capital Management cost $3.6 Billion]
To get the inside information on just what happened ... you have to read John Mauldin's newsletter - and consider subscribing for the best commentary on world credit and investing markets I have found. Click here to read "Let's get real about Bear" and learn why this was most definitely NOT a bailout. This is a MUST READ!
Here's the good news.Goldman Sachs and Lehman Brothers both reported earnings today that beat the street's expectations ... so the bleeding may be stopped for now. At least the fears of Bear Stearns being the first of a set of falling dominos is on the back burner now.
Expect a huge and temporary stock market surge on this news.
Bottom line: - Hoard your cash ... the buying opportunities will come.- Don't expect any loan origination to be easy in the next several months minimum.
Looks like we were all standing on the edge of a cliff for a moment and fortunately we have taken a step back. I am talking about the collapse of Bear Stearns that ended in the buyout by J.P. Morgan over the weekend. The actions of the Federal Government showed they are clearly treating this as in impending collapse of the US credit markets. They obviously felt a Bear Stearns collapse would have taken the whole economy down with it. Just look at the numbers....
- Bear Stearns was worth $20 Billion in January.
- Their New York headquarters building alone is worth $8 per share.
- They were bailed out by J.P. Morgan for an incredible $2/share
- Total value of the deal was only $236 Million
- Remember they were worth $20 Billion two months ago ... that's just under 12 cents on the dollar ... a "fire sale" in anyone's book.
- AND the Feds threw in an additional $30 Billion in guarantees to lower the risk of the deal.
- Both President Bush and Secretary Paulson signed off on this deal. [Historical Note: The 1998 bailout of Long Term Capital Management cost $3.6 Billion]
To get the inside information on just what happened ... you have to read John Mauldin's newsletter - and consider subscribing for the best commentary on world credit and investing markets I have found. Click here to read "Let's get real about Bear" and learn why this was most definitely NOT a bailout. This is a MUST READ!
Here's the good news.Goldman Sachs and Lehman Brothers both reported earnings today that beat the street's expectations ... so the bleeding may be stopped for now. At least the fears of Bear Stearns being the first of a set of falling dominos is on the back burner now.
Expect a huge and temporary stock market surge on this news.
Bottom line: - Hoard your cash ... the buying opportunities will come.- Don't expect any loan origination to be easy in the next several months minimum.
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