Random quotes, images, and thoughts from Ed Ireson.
JP Morgan just raised their bid to takeover Bear Stearns to $11/share. Of course the Fed has promised to cover anything beyond the first $1 billion dollar of bad loans made by Bear Stearns. So this becomes a game of roulette for JP Morgan.
Here’s the problem, as told by NPR’s Robert Reich: “But it’s not really that risky a bet because if Bear’s assets contain more than $1 billion dollars of junk, the Fed makes up the difference. Which means you and I and every other taxpayer take a hit. If this bet pays off, JP Morgan’s shareholders make a bundle. If it doesn’t, they still may make lots of money, but we lose.” (Source)
So why is the US government helping private businesses? I understand that a British-style takeover (with Northern Rock) wouldn’t be acceptable - but giving JP Morgan billions upon billions of taxpayer dollars with no reward down the road? That’s just stupid.
