My father worked at Bear, Stearns for ten years, so I took more than a casual interest in the news that J.P. Morgan will buy the 85-year-old Wall Street firm for $2 a share -- that's about 7% of the firm's market value as of the close of business on Friday, and about 3% of the firms' value as of a week ago today.
In case anyone was still wondering whether the economy is in trouble, I think the answer is now officially yes. When an investment banking firm previously worth billions, that withstood the Great Depression and a dozen recessions since, dissolves in a puff of smoke, something is wrong.
How many other titanic firms are just waiting to lose 97% of their value in a week? Has anyone else bet the farm on some allegedly safe but astoundingly complicated twenty-first century investment vehicle?
Thank goodness we have a President and an administration that understand these matters and are acting prudently to avert further disasters.
No comments:
Post a Comment