Why is not all FED support made in the form of convertible loans? That's what the sovereign wealth funds did.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

Brazen daylight robbery. What will it take for people to notice these things? Will the Ruling Class have to in fact dissolve the Senate and start crucifying people? How much more direct does theft need to be? It reminds of the of the chapter in the Silmarillion about the fall of Numenor where Sauron, having corrupted the King, is busily dragging victims to be burned alive as sacrifices while the people are going "la la la". Or cheering. Come to think of it, this may literally be what has happened. How else to explain the evident lust for torture and the unquenchable bloodthirsty greed for gold?

I have an idea. We could institute a monthly lottery to more fairly and efficiently allocate resources upwards. The rich get the tickets, the rest of us are the tickets, and the lucky winners get brand new slaves. Sort of like now, except less slicing and dicing...they get the entire body, not just some fraction of its appropriated labour. This of course is where they are headed and what they want.

On that subject, in the "Oh, have you noticed?" department, we read on the front page of today's online WaPo that Even though workers are producing more, median family income has fallen 2.6 percent since 2000 which they attribute to "Health costs cutting into wages". By which they mean "Insurance company profits and executive loot expenses cutting into wages."

This is disgusting.. this is so disgusting.. but eiii.. people are worried about the little theft in the sueprmarket... someone stealing millions and millions..ei no problem..

gee.. taxpayer money to support a blatant robbery.

I really want to throw up...

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

http://www.dailykos.com/storyonly/2008/3/24/95939/2383/980/483114

In the long run, we're all dead. John Maynard Keynes

How about "No Bailouts for Non-Retail Banks"?

Be nice to America. Or we'll bring democracy to your country.

anything from the Democrats on this one, not in any meaningful and direct way. Because that would undermine one of their sources of donor money.

Senator Schumer, on the other hand, will likely have some good things to say about the sweetened deal. He's all about socialism...for wealthy shareholders in his state.

Hmmmm..there ysed to be a name for that....what was it again?

The Hun is always either at your throat or at your feet. Winston Churchill

I wonder if the Democratic candidates will speak against the deal?

No.

("This has been another edition of simple answers to simple questions.")

Be nice to America. Or we'll bring democracy to your country.

Bear is Saved for JP Morgan to be Saved

Fed saved Bear Stearns by guaranteeing 29 billion of their bad paper in order for JP Morgan to be saved since Bear going down would have in effect allowed JP Morgan to fail due to the credit swaps problem which JP Morgan was holding lots of Bear's swaps. So essentially The Fed bailed out JP Morgan via the Bear guarantees. If there wasnt any liability to JP Morgan if Bear has gone out; then they would have let Bear Stearns file for Bankruptcy and that would be that. The increased offer by JP Morgan to the stockholders is a token of JP Morgan's own appreciation for allowing this deal to go through. The Bear stockholders know JP Morgan is not going to flinch over $10 per share since the damage to JP Morgan if the Bear deal falls apart is exponentially much greater than any sweetened offer. The Fed and JP Morgan knew the $2 original share offer was their initial low ball deal and were expecting to have to sweeten the offer.It will be interesting to see if this latest offer is good enough for the shareholders since the shareholders know both the Fed and JP Morgan cant afford for the deal to fail. What is the highest price JP Morgan will have to pay per share?

Who knows where the next problem is and what the ramifications are for other banks but to think the very same people who created the problem are now going to be part of any long term solution is delusional. The very fact that no one has proposed investigating why this over all financial debacle happened and who caused it should give everyone pause. Of course they have already started proposing 'solutions and possible regulations' without any due diligence by a totally independent commission, to the reasons why the whole mess happened.

The Fed, banks, financial entities etc. are hoping to delay the damage with the wish there be no transparency and enough time for the assets to gain value and make the balance sheets healthy.

What I cant understand is how come shareholders and district attorneys around the country arent suing civilly and indicting them all for fraud, respectively. It would seem easy to indict for fraud and many other criminal charges when Bear and other companies' executives make public statements their businesses are fine only days before they are bailed out by the Fed or declare bankruptcy.  Or when executives take huge bonuses knowing full well their companies' balance sheet problems will be public knowledge in a short period of time is also fraudulent.

Anotherwards many people should be going to jail or be forced into bankruptcy just defending themselves.

Jerome wrote:

thanks to taxpayers stepping in.

It's more like the taxpayers were dragged in, feet first.

This has been a crisis of Anglo-Saxon transaction-based capitalism. Not too long ago, it was considered to be vastly superior to the eurozone's old-fashioned relationship finance. I doubt that in a few years' time people will continue to assess the relative strengths of the Anglo-Saxon and continental European financial systems in quite the same way. I would also expect the eurozone economy to withstand the economic shocks of the credit crisis in relatively better shape.

In the long run, we're all dead. John Maynard Keynes

Beware a regulatory backlash against banks

Banks are focused on the current crisis but they should keep their eyes on another looming problem: a regulatory backlash that is already under way in some countries. It will be costly and will have unintended consequences.

The political dimension is broadening as the banking crisis feeds into the real economy. The US could already be in recession, the UK is slowing down and European Union growth forecasts have been scaled back. As people see the value of their homes fall, find banks less willing to lend money and feel the effect of rising inflation allied to average wage growth that has already not kept pace during the boom years, the calls by bankers and some regulators for measured reactions may not be listened to.

In the long run, we're all dead. John Maynard Keynes

The fact that the Fed made a gift of $30 billion of taxpayer money to JPMorgan has somehow led to much less outrage and is likely to remain (the WSJ article does mention that the terms of the Fed support may change, so we'll see).

how does exchanging $29 billion in cash for a portfolio of $30 million (marked down to best estimate of value) of assets qualify as a "gift"?  If the NY Fed ends up with a profit on the deal (like the Mexico loans or Brady bonds in the past) will you still consider it a "gift"?

The shareholders of Bear were free to reject the $2/share deal and take Bear into bankruptcy instead.  So JPM comes up with the extra cash to close the deal.  They tried to steal Bear on the very cheap and now it's just regular cheap.  hardly a crime.

As for expecting a government bought and paid for by big business to protect little folks first... want to buy a bridge?

I don't know how many people in Europe know of Jay Gould a master of watering stock.

This seems to be part of the revised deal. There is more to this story than meets the eye. If the firm went bankrupt then various insurance policies in force against bond losses would have to be paid out. It is possible that JP Morgan has written some of these and would end up losing more money than they may from having to take on the existing liabilities of Bear Stearns.

Don't let your desire to see the "evil doers" get their comeuppance influence objective analysis. Many holders of common stock are just regular folks who thought they were investing in a safe, yet high yielding, firm. Many are employees who may or may not be responsible for bad practices.

Those who held Bear's instruments will suffer a loss regardless of what happens to the common stock.

Policies not Politics
---- Daily Landscape

Why not let the U.S. financial system collapse? Can't we save the economy without it? The U.S. financial system is not really providing any net addition of value to the economy. It's more parasite that anything else at this point.

Would the collapse of Bear Stearns have brought down the whole economy? Or just the financial system?

It seems to me that this problem is being approached the entirely wrong way.

First. What do we need to accomplish? We want to ensure that credit is flowing to people who need it to conduct real economic activity. If a bunch of speculators and hedge funds are unable to get credit, why should anyone care? They are not going to use it for real economic activity.

So, let the financial system collapse. Is there not a way that we can force the trillions of dollars sloshing around the globe looking for the highest return to become "patient" and start pouring into the "green" rebuilding of the U.S. industrial economy, such as building mass transit systems that will help free us from fossil fuel dependency, or helping everyone replace their current vehicle with either hybrids or with high mileage vehicles.

As it stands, Bear Stears is saved and the financial system lives on to keep playing its funny money games, while the underlying problem is not addressed, and is not being addressed: the credit mechanism of the economy is being mis-used for speculation, rather than for funding real economic activity. Which means that another financial crisis is inevitable. So lets start asking questions "outside the box" with a view to radically transforming the financial system and forcing it to start doing something useful.

I believe this is going to be an important issue in the next year or two, as the political situation will shift radically as the economy deteriorates, and what was once thought impossible becomes thinkable and doable.