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.