The C-word
Posted by Dalton48 on 17 Mar 2008 at 07:39 am | Tagged as: Business
In the markets is capitulation. And it’s definitely underway now.
Huge investment bank Bear Stearns to be sold to JP Morgan for nothing close to its Friday closing price of $30-ish per share, but for $2 per share. If there’s any reason it’s not just $1 per share, it’s not obvious. The only reason seems to be to prevent even more panic than the $2 fire sale price already is.
In January 2007, Bear Stearns had a market cap of $20 billion. To give some context, that’s the same level as the current market cap of our BMO, whose stock price has lost 6.8% in the last week and 31% in the last three months because of its own credit issues. Now, BMO is for the most part a large, stable retail and commercial bank, backstopped by the too-big-to-fail promise of OSFI — no Bear Stearns. Still, I’d imagine anyone who shorted the stock last week is feeling pretty good this morning.
Did you happen to hear Shirley Cooper on the CBC today. Everything’s just fine up here… Jeff
Is she any relation to Sherry? BMO has been pushing its exclamation-point peppered happy Canada scenario for a while.
Quite closely related in fact: indeed, when BMO sells for $2 a share to Blackstone, Sherry will change her name to Shirley and head a class action group claim against EVERYONE. Jeff
Quotation of the Day for March 26:
My friend Tony, however, is sanguine. ‘Sorting out who’s in the shit is going to be a nightmare, but when it all shakes out, all it’ll mean is that credit is a little bit more expensive. That’s a good thing. It had got crazy. It was cheaper for companies to borrow money from other companies than it was for governments. That’s nuts. These things are cyclical, it had all just gone too far and we needed a correction.’
‘So we’ll have to stop running around spending money like drunken sailors,’ I said.
‘Well, drunk sailors tend to be spending their own money,’ Tony said. ‘By contemporary standards they’re quite prudent.’
- John Lanchester, writing about the sub-prime mortgage crisis in the London Review of Books.
[http://www.lrb.co.uk/v30/n01/lanc01_.html]