{"id":196911,"date":"2008-03-14T16:41:00","date_gmt":"2008-03-14T21:41:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/03\/14\/bear-stearns-i-may-have-gotten-a-prediction-right\/"},"modified":"2008-03-14T16:41:00","modified_gmt":"2008-03-14T21:41:00","slug":"bear-stearns-i-may-have-gotten-a-prediction-right","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/03\/14\/bear-stearns-i-may-have-gotten-a-prediction-right\/","title":{"rendered":"Bear Stearns, I May Have Gotten a Prediction Right"},"content":{"rendered":"

On August 2 of last year, I said that within a year, Bear Stearns would cease to function as an independent entity<\/a>.<\/p>\n

I’m not right yet, but I don’t see how I won’t be right in the next 5 months.<\/p>\n

Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.
Mayor: What do you mean, “biblical”?
Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!
Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes…
Winston Zeddemore: The dead rising from the grave!
Dr. Peter Venkman: Human sacrifice, dogs and cats living together… mass hysteria!<\/p><\/blockquote>\n

And it would seem, that I actually get a prediction right, which is another<\/span> sign of the apocalypse.<\/p>\n

Just yesterday, the Bear Stearns CEO said that there were no liquidity issues<\/a>, but today, JPMorgan Chase and the New York Fed have gotten together to bail them out<\/a>.<\/p>\n

Basically, the Fed can’t bail out Bear Stearns, it’s out of its authority, but it can guarantee JP Morgan’s loans to the embattled investment bank, which it did.<\/p>\n

Actually, a closer reading makes it even more extraordinary. The Fed directly lent money to Bear Stearns<\/a>, using an authority last used in the 1960s<\/span>, which required a vote of the Fed’s Board of Governors.<\/p>\n

Typically, the Fed is only supposed to lend to banks, and Bear is not a bank, but an investment house.<\/p>\n

As to the statements of the CEO yesterday, I would call them a bald faced lie, but I don’t have a Harvard MBA, so I don’t know the fancy term for blowing smoke up everyone’s ass.<\/p>\n

Of interest is some potential insider trading, specifically, someone traded 55,000 Bear Stearns puts Tuesday<\/a>. (A “Put Option” is basically a bet that the stock will decline in value.)<\/p>\n

One of the results of all of this is that money has been fleeing to Treasuries<\/a>, or fleeing the US entirely<\/a>, with the dollar down.<\/p>\n

One of the things you have to understand is that Bear Stearns is a pretty small player in all this, with a market capitalization of “only” about $15 billion dollars, and we’ve got the markets jumping out windows.<\/p>\n","protected":false},"excerpt":{"rendered":"

On August 2 of last year, I said that within a year, Bear Stearns would cease to function as an independent entity. I’m not right yet, but I don’t see how I won’t be right in the next 5 months. Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.Mayor: What do …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1080,973,1004,985,1164],"tags":[],"class_list":["post-196911","post","type-post","status-publish","format-standard","hentry","category-corruption","category-currency","category-economy","category-finance","category-regulation","category-teotwawki"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196911"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=196911"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196911\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=196911"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=196911"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=196911"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}