President Bush is saying that the administration is showing “the country and the world that the United States is on top of the situation.” The word frown, which rhymes with the name of the man in charge of the Katrina disaster, which President Bush said was “doing a heckuva job,” is the appropriate gesture for me as I read about the Bear Stearns bailout.Bush

President Bush is being accused of violating his principle of opposition to government intervention (remember the administration is a big fan of “letting the market work its magic”) and is being accused of not doing enough to correct the market disarray rampaging through Wall Street. They’re getting it from both sides. Nobody is happy here.

This has given ammunition to the Democrats, where Senate majority leader Harry Reid said, “Now that the president has shown his willingness to bail out Wall Street at taxpayer expense, I hope he will drop his opposition to proposals designed to help ordinary homeowners.” And Senator Barrack Obama said the economy is “in shambles.”

I have a bad feeling about this as I’m sure a lot of people do. The headquarters building of Bear Stearns is reportedly worth close to $1 billion and they did not come close to that in the purchase price of $236 million that JP Morgan is paying to acquire the firm. That says something, I’m not sure what, but it can’t be good. A building worth $1 billion and Bear Stearns is in such bad shape they have a negative effect on their own hard assets. Someone knows that its worse than it looks otherwise JP should be willing to pay the $1 billion just for the building.

Bear Stearns employees hold 30% of the company stock and are threatening to vote against the deal. It would seem to me that they would come out better in a bankruptcy liquidation. I keep thinking of the value of that stupid building! However, everyone is scared to death of what a major financial bankruptcy such as Bear Stearns would do to others firms and to the market. We may be way past that now.

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