Miika Grady

Bear Stearns Bailout: Sentiment vs. Reality

There has been a lot of commentary trying to make sense of the Bear Stearns buyout. But, none of them quite captured my sentiment on the matter as did this article [ "Dear Ben: Really, Next Time, F*** Wall Street." ] from, of all places, fashion/celebrity blog Jezebel.

The gist of the article is: A.) Bear Stearns should’ve been forced to eat it because it was their own greed that got them caught up in the Ponzi scheme, subprime mess in the first place. B.) JP Morgan is getting a sweetheart deal from the Fed. And, C.) Yesterday’s 3/4 point rate cute is all about saving Wall Street’s millionaire, investment banking, hypocritical ass. Shouldn’t Wall St and Bear be forced to suffer the consequences of their own irresponsibility (much like any individual would)?! Isn’t that the basic tenet of capitalistic, business philosophy?! Besides, I’m constantly getting the short-end of the stick financially because all of these c-suite, investment banker guys get rich squeezing the little man (me). Screw them! Seems simple enough.

To be honest, I only have a decent layman’s understanding of why the economy is hitting the fan (Click here if you need further explanation). I know it isn’t that simple. The Fed couldn’t just let Bear declare bankruptcy. A.) There are plenty of “little people” at Bear, and declaring bankruptcy would’ve immediately locked their doors Monday morning, with no severance pay to boot. B.) It would’ve had a massive ripple effect on all investment banks, the mortgage industry, Corporate America, etc. And, C.) Letting investment banks collapse is what led to the Great Depression.

But, it still stinks. As a graphic/web designer (who was smart or lucky enough not to get himself caught up in some crazy ARM mortgage) I know there are more informative, educated and lucid sources of information concerning the Bear Stears bailout than me. Among them: The Big Picture, Paul Krugman, Dealbook, Calculated Risk, Marginal Revolution, etc. But, how can JP Morgan swoop up Bear for less than the price of the building they occupy in mid-town Manhattan? It just doesn’t make sense. I just can’t help but feel that the Fed is basically using tax payer money to prop up a failed bank, give another bank that doesn’t need any favors a huge freebie, and save a bunch of executives who will eventually disproportionately profit from the bailout.

Rhys giggles

Rhys is really developing fast. Everyday he’s doing something new. Last Thursday was his first giggling fit. We caught some of it on video.