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Even $32 billion couldn't put Humpty Dumpty back together again


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Global crunch snares Bear

* Staff reporters Sydney Morning Herald

* March 17, 2008 - 5:28PM

The global credit crisis triggered by US mortgage failures has claimed its biggest casualty, with the fifth-biggest US investment bank Bear Stearns all but wiped out.

Rival JP Morgan Chase this morning swallowed Bear Stears for $US230 million ($245 million), just 14 months after the bank was worth about $US22 billion.

The US Federal Reserve, the country's central bank, has also had to step in, offering support for as much as $US30 billion ($32 billion) of Bear Stearns's ''less-liquid assets,'' the two companies said in a statement today.

The Fed today also cut the interest rate it charges commercial banks to borrow by a quarter-point, or 25 basis points, to prevent markets seizing up.

Australian share markets resumed their recent slide, slumping as much as 2.8%, or 145 points, to 5,062 points. ANZ, Commonwealth Bank and Macquarie Group were among the biggest losers, as investors bet their cost of funds will increase, squeezing their profits.

The deal values Bear Stearns at just $US2 a share, or just 1/15th of its close on Friday. The $US230 million price tag compared with its $US4 billion market value on Friday, itself barely a fifth of its peak back in January 2007.

The absorption of Bear Stearns ends 85 years of independence for the banks, which has more than 14,000 employees, many of whom may now be fearing for their jobs.

The takeover, though, meant the bank avoided bankruptcy and wider systemic damage in financial markets stretching from Australia to Wall Street, Europe and Asia if Bear Stearns' trades unravelled. Clients pulled some $US17 billion in two days last week, and creditors stopped renewing loans, Bloomberg News reported.

''JPMorgan Chase stands behind Bear Stearns,'' JPMorgan Chief Executive Officer Jamie Dimon said in a statement. ''Bear Stearns's clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns's counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.''

Bear Stearns' demise began last July when two of its hedge funds collapsed, one of the first signals that failures by holders of many so-called sub-prime mortgages to make payments on their debt would have far wider consequences for US markets, and beyond them, for the rest of the world.

With Bloomberg

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So, JP Morgan Chase has just come out at least $31770000000.00 ahead in the deal? Not bad for a days 'work'. For what? Is this Economic Rationalism?

The sooner all these useless corporations are put out of our misery the better. I know there will be 1,000's of unemployed financial sectors bots on the loose but they could all be usefully retrained to pick fly poo out of pepper with boxing gloves on. Or they could spend the rest of their lives writing apology letters to the homeless and hungry. All they know is the price of everything and the value of nothing.

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Guest David Guyatt

The thing is Maggie, is that the bulk of those son t be unemployed will be ordinary mortals. It s the extra wealthy greeds who need the opprobrium -- but they're safe as houses already.

It's always the same losers...

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[quote name='David Guyatt' date='Mar 17 2008, 04:16 PM' post='140968']

The thing is Maggie, is that the bulk of those son t be unemployed will be ordinary mortals. It s the extra wealthy greeds who need the opprobrium -- but they're safe as houses already.

It's always the same losers...

So so true. This is SCARY. The media is "covering" it but downplaying just HOW serious this is.

Dawn

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If you get a chance watch it (see link) . I've seen Enron: The Samrtest Guys in the Room and also The Sting. They both show something of what is happening. The thing I love about The Take is that it shows that people do not have to be powerless. It is not easy but it shows people taking control of their lives and making their own rules according to their own needs. Bosses/owners don't even come into the equation. I think everyone should watch it.

The thing about oil getting higher in price (and running out) is that food is going to become the new fuel with biodiesels and ethanol. Fidel Castro was on to this ages ago and now the western environmentalists are starting to campaign on this at last. Even pasta strikes in Italy over the increase in food costs. http://news.bbc.co.uk/2/hi/europe/6992444.stm and http://www.treehugger.com/files/2007/07/it..._tough_call.php The rich will plunder the worlds food stocks so they they can maintain their 'lifestyle' in spite of everything. More people than ever will starve and food will be burned.

Thanks for the above article by Whitney. It is always instructive to follow the money

Edited by Maggie Hansen
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It's just like Argentina a few years back but on a far grander scale.

Has anyone here seen 'The Take'? By Avi Lewis and Naomi Klein.

http://freedocumentaries.org/film.php?id=176

I haven't seen 'The Take', but I know we've robbed every country blind we've put our tenticles around. How about the movie 'The Sting' with Paul Neuman.....that reminds me of what is happening. Its only the Enron-ization of America and the Planet. This time [as in last depressions] it is the ultra-ultra-rich taking in their chips from everyone below them. It is predicted that there will be up to 30,000,000 new homeless in America, after loosing their homes to these leeches. What with oil at

$111 and going up toward $200; Food prices going up at the highest rates ever; unemployment to hit 1929 Depression levels; and more [no, make that less..

] I can only hope some wake-up from their stupor. This is all planned - along with all the Wars; the destruction of the Environment; the false values;

he lies; the control system; the spying on you; the assassinations; government o

erthrows (including your own) and all the junk you've been taught to think is important - which is not.

Wake-up call coming just now. The question is if on this last chance the People will awake or buy the new lies that will be spun to point the blame on some outside other. The evil is within and IS the system and those who rule it.

First, the People must awake to the deceptions. Second they must get angry at the real villians in this play [ruling elites]. Then they must act and change the form of government from this sick, unsustainable top-down model to a sane and sustainable, fair one that is bottom-up....or we all perish, worldwide - but the rot is starting in America.

Here is a good place to start for the economic problems: http://www.kpfa.org/archives/index.php?arch=25261

For answers, try the book The New Turning [or so many others like that] or the film The End of Empire - What a Way To Go

Peter: I was just about to post the "Guns and Butter" link, but see you already have. Another must view.

Dawn

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Guest David Guyatt

A very insightful article by Pam Martens, a former Wall Street insider who knows how the ropes are tied.

It will be met by a deafening silence in the corridors of power where greed and rip-off legion.

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