Monday, March 17, 2008

Where was Bud Fox when all this went down?

I'm not going to pretend that I understand exactly what happened the last few days in regards to Bear Stearns. I do know that a company that was worth billions last week and billions beyond my wildest dreams about 14 months ago was sold for pennies on Sunday to JP Morgan. I can grasp that. Friday they were worth X. Sunday they apparently were worth X/10. I guess I understand. But how does that happen? How can a company that has a building worth approximately $1.2 billion be sold for $236 million total? And how does the CEO of that company go on television one day and say that he does not see any pressure on its liquidity and his company has about $17 billion in excess cash on its balance sheet, and then a few days later his company sells to a competitor at such a ridiculous discount?

I don't know the answers to any of those questions. And I have a feeling that a lot of people who are a lot smarter than me don't know the answers to those questions either. What I do know is that thousands of littler people who work for Bear Stearns or JP Morgan will probably lose their jobs while a guy like Alan Schwartz will get to keep his or get a crazy buyout.

Capitalism at its finest [worst].

2 comments:

  1. Malcolm Says:

    The really insane thing about this whole story to me is that 14 months ago Bear was trading at over $150 a share. Last Friday it was down to $30/share, and on Sunday they agreed to be bought for an all-stock deal at $2/share, equivalent to about $236million. Now, the actual cost to JP is going to be a much higher multitude of that considering the costs of merging operations and workforce downsizing, but the insane thing is that Bear’s Madison Avenue headquarters, recently completed by the famous (if not particularly adventerous) firm Skidmore, Owings, & Merill, is worth approximately $1.2 billion, which presumably will now be in the hands of JP Morgan. I think that just goes to show you how scary the liabilities that Bear has on its books must be, for such a discount to be paid. Hopefully JP can use the trading floors in that building so they don’t have to build a shadow-inducing cantilever at their Ground Zero site.

  2. Rich Says:

    JP Morgan is David Rockefeller who belongs to The Bilderberg Group = http://youtube.com/watch?v=I-15EjHCzds