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« Interpreting a Volatile Week | Main | If you cannot pass this investment test, turn over the car keys »

March 24, 2008



Sorry, but I am still waiting for proof that the taxpayers are even involved here. The Fed is a private corporation that has special monopoly rights. It is not supported by the taxpayers.

Unless that $30 billion is coming from Treasury and not the Fed itself, its not taxpayer money.

The fact that people like financial authors of articles like this should know better, but don't is rather disturbing. The WSJ just posted an opinion piece displaying the same level of ignorance. Amazing.

Seemingly Useless

JPM seemingly did steal BSC stock but the risks of the acquisition are still unknown. I think investors are being superficially bullish by the fact that it is a fed-backed deal. What is a mystery is the stock movement for JPM. The market priced in a $2 bid acquisition last week so shouldn't JPM stock decline if they are paying five times more to acquire a questionable company. Nothing fundamentally has changed since the last 2 weeks, silver lining or not.


I'm not an expert on the H.4.1 and I don't understand what you are implying. Are you saying that the Fed is not "financing" these assets or that the assets have zero value?


What we know is that the balance outstanding under the arrangements involving JPMorgan and Bear Stearns is exactly ZERO as of wednesday 19th.
H.4.1 statistical release, in line "Other credit extensions"


This is the first intelligent post I've seen on the Fed financing component of the Bear deal. The truth is no one knows exactly what securities the Fed is taking. I haven't even seen informed speculation. All we know is that the Fed thinks the market value was 30bb on 3/14. Are they overpaying, was the real MV 25bb? Were the assets worth 45bb the week before? What is the par value of the portfolio? On average MBS are grossly underpriced to fundamental value due to enormous liquidity pressures and financial stigma. The Fed could be getting a fantastic trade here, until we see CUSIPs no one knows.

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