JP Morgan Grabs Bear Stearns for $2; Long Recession Ahead
by H.S. Ayoub, DMD
BioHealth Investor
I know this is supposed to be a blog covering the biotechnology and medical industry, but in an unprecedented move for this blog, a major non-health related event will have to be commented on.
Bear Steans (BSC) was forced to sell itself to JP Morgan (JPM) for a whopping $2 a share, equal to $236 million in total! The company was worth over $20 billion just a couple of months ago, representing a drop of over 90%.
This was following the horrible day of trading on Friday after JP Morgan, with the help of the Federal Government, gave Bear Stearns a month long loan after investment firms and banks pulled their holdings from the troubled firm amid liquidity concerns.
Asian markets dropped big as soon as the acquisition was announced on Sunday, and Wall Street is bracing for another crash on Monday.
Firms around the world will be forced to re-analyze their investment assets in other financial firms, especially those based in the US, in order to stay ahead of a similar illiquidity problem that brought down Bear Stearns, and will be less motivated to invest new capital any time soon.
The dwindling economy, coupled with rising energy costs due to high demand from China and India, places the US in a situation never seen before; at the sidelines and not the epicenter of the financial world.
For those that think we are not in a recession, or at least the recession we are already in will not last too long, think again. We might very well be at the start of a long and gloomy couple of years.
BioHealth Investor.com
_______________
BioHealth Investor
I know this is supposed to be a blog covering the biotechnology and medical industry, but in an unprecedented move for this blog, a major non-health related event will have to be commented on.
Bear Steans (BSC) was forced to sell itself to JP Morgan (JPM) for a whopping $2 a share, equal to $236 million in total! The company was worth over $20 billion just a couple of months ago, representing a drop of over 90%.
This was following the horrible day of trading on Friday after JP Morgan, with the help of the Federal Government, gave Bear Stearns a month long loan after investment firms and banks pulled their holdings from the troubled firm amid liquidity concerns.
Asian markets dropped big as soon as the acquisition was announced on Sunday, and Wall Street is bracing for another crash on Monday.
Firms around the world will be forced to re-analyze their investment assets in other financial firms, especially those based in the US, in order to stay ahead of a similar illiquidity problem that brought down Bear Stearns, and will be less motivated to invest new capital any time soon.
The dwindling economy, coupled with rising energy costs due to high demand from China and India, places the US in a situation never seen before; at the sidelines and not the epicenter of the financial world.
For those that think we are not in a recession, or at least the recession we are already in will not last too long, think again. We might very well be at the start of a long and gloomy couple of years.
BioHealth Investor.com
_______________
posted by Nico at
10:59 PM
1 Comments:
85 years of good will and retained earnings gone in a week.
And, to think that 1/3 of teh stock was owned by employees. Another painfull Enron, Nortel, Lucent, MCIC, AmWest Air type lesson.
I am against 401Ks for many reasons. I am against buying stock in 401Ks and dead set against being able to buy company stock in the 401K.
What's more of s discrace is that most companies don't match in cash but rather in company stock. This practice is outrageous and nobody cares......
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