- Richard
Richard Wilson

JPMorgan’s CEO, James Dimon, is playing the markets, press and Bears Stearns investors perfectly. He knows exactly what he is doing and is executing with precision. Yesterday we learned that JPMorgan sweetened the deal now to $10 USD a share, up from a shocking $2 original bid. Dimon was quoted in the Wall Street Journal as saying, ‘We took another crack at it to get it just right.’

Our theory is that Dimon knew all along that a $2 bid would have tremendous shock and awe value. In fact, he was counting on it. What better way to steal acquire Bear Stearns’ stock than to quintuple your original offer a week after the investors and the press couldn’t talk about it enough? Current Bear Stearns shareholders and investment bank employees had already calculated the fortune that got flushed down the toilet – now, hopeful again, they would be thrilled with any double digit stock price. A classic negotiating tactic is playing out before our eyes and, for most, the offer change comes as big news. We’re thinking this approach could go even further.

In mid-March, a beaten up Bear Stearn’s stock was nearly $60 a share. To think that JPMorgan (or anyone else for that matter) could pick it up for even $20 a share was unfathomable at that point. Now, even if Dimon takes another “crack at it,” he’ll be pleased as punch to take the stock at $15 a share – especially with the aid of the Fed. Dimon knows the potential upside and he’s already protected JPMorgan from the downside.

If JPMorgan’s target price for Bear Stearns was $12-15 a share all along, then anything less than that is simply icing on a very sweet cake.

John
Hedge Fund Jobs

joe consumer reminded a thought i have; all the extreme additions to the cost of living in the usa: littering is $1000. because a candy wrapper flew out of your hand while in a car? $400 for missing a stop light? $400 for speeding? and the many little no-cause-to-worry fees: $10 additional to buy a car battery, $10 to check if gas is evaporating from your gas tank, recycling fees on plastic and aluminum.

a $400 fine would put me behind so bad it could dominoe affect me for months. i could learn my lesson just as well with an affordable fine, discomfort of court and humiliation. such unexpected costs destroy peoples lives down here.

i quit my job bcz my landlord gave me 30 day notice to move and i could not find another house in two weeks that i could afford of a size to fit me and my furnishings. and i had to give two week notice that i would be quiting. unemployment denied me compensation bcz i took the offer from my sister to move with her– too far to keep my job– but i would be able to save my things and the family possessions i received– as my mother had just passed away. the agency said i should have just rented a room for myself. but as my landlord was also my employer, i had very little confidence i could keep my job much longer.

i post this to illustrate one anecdote on how a person who makes up the basis of this economy has little recourse when “all hell breaks loose” in a low wage earners life. the only hope we have is unemployment and they are heartless. i thot i was doing the right thing to insure i at least had a place to stay so that i would not need to ask the taxpayer to give me food or voucher if i found a place to rent and lost my job as well.

so it concerned me deeply to hear that people who have two homes might have to sell one bcz of BS going bust. its like those who watch deal no deal, while eating top ramen and cheering on a stranger who doesnt work, hoping they win 1000s of dollars.

how could parents raise kids to be that stupid expect the family to progress into something better, as should be the goal of the gaurdian? (aka the govt)

http://www.socoolaz.com/article.cfm?articleID=30193

As for those decrying this as a defeat of free market principles, I believe that is disingenuous. I am as much a proponent of free market principles as anyone here. However, the system was heavily regulated and disrupted by the government even before the crisis started. There are plenty of valid arguments that the government started the crisis in the first place. Some people feel that without a gold standard, the Federal Reserve is engaged in central planning, and thus Greenspan’s 1% interest rates in 2003 were to blame. Other people feel that state and municipal government pressure on lenders to offer loans to low-income, ethnically diverse neighborhoods was a cause. For me personally, I’d say that the existence of so much (useless) financial regulation provides investors with a false sense of security that undermines the operations of the free market.

If in fact government regulation of and interference in free markets is to blame for the crisis, then to argue that government intervention to solve the crisis is anti-free-market is, in my opinion, intellectually dishonest.

The Fed had to do what they did , but unfortunately as a side effect maybe creating other systemic problems as they try to ease what is probably going to be one of the largest world wide market de-leveragings of our time.

There were many hedge funds who did pull their money and move them to other prime brokerages. That was one of the reasons there was a “run” on the bank. However there were many more who have been leveraged up to the hilt thanks to generous lending from BS who didn’t have anywhere to run. Hence the bailout.