Most people who pay attention to the financial news have been mesmerized by the Bear Stearns fiasco. This is the biggest fraud since Enron and another good reason why you cannot rely on the government to protect you or your money.
A little background, in January 2007, Bear was worth about $20 billion and was trading at about $175 per share. Last Friday Bear had a market value of about $3.5 billion. Last night, it sold for $236 million to JP Morgan, a price that is far lower than the book value of the building that it owns; estimated to be worth about $1.3 billion. Now, Bear and JP Morgan contend that this price is preferable to filing bankruptcy; however, if Bear were forced to file for bankruptcy, all of its payments over the last 90 days prior to filing bankruptcy would have to be repaid to the company under the 90-day lookback provision of the bankruptcy code. If that happens, it would most likely be revealed that Bear paid out billions, that's right, BILLIONS of dollars to its employees and executives last January as bonuses. Now where does the government come into this? Well last week, before the $2 JP Morgan offer was announced, JP Morgan, with the backing of the Federal Reserve, announced a plan to bail out Bear Stearns and guarantee Bear's financial future. The current $2 sham offer is also backed by Uncle Sam; which of course means that you, as a taxpayer are paying for this bail-out.
As the "gentleman" in the following video says it much better, the american taxpayer is paying for the Bear Stearns executives' maseratis.
And on the funnier side, Jim Cramer, the blowhard who is tolerable for about 4.5 seconds, said last week on CNBC that there was NOTHING to worry about, and if you were to take your money out of Bear, you would be silly, silly, silly.
Oh really? Bear Stearns has dropped from $30 per share to a little over $4 per share today.
Let the games begin.
(Thanks to #5 for the videos)
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment