Adam Weiss was at his computer at home last Sunday when he saw the headline announcing that Bear Stearns was being forced to sell its stock for $2 per share. He couldn't believe it.
Less than a year earlier, shares of ...(back to the article)
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Wah, wah, wah, the middle classes are being so oppressed. As for "other people's" social safety net benefits, last time I checked those in the upper and middle-classes use federally-funded soc. security, retirement funds, roads, highways, etc. as well. As for the "crack addicts and high school dropouts" you mention, I love how any comment suggesting that perhaps we should spend more time focusing on how corporate fallout affects the less fortunate is met with typical rightist whining about how the poor are lazy and are "stealing" our tax dollars. Glad to see that social darwinism is working out for ya.
In bankruptcy, shareholders would have received zero. All the derivatives that Bear Stearns was about to default on would have wiped out all shareholder equity. JPMorgan Chase's guaranty of those derivatives contracts was the key to the bailout, and they made sure that there was an upside to them in the stock purchase price that could not be circumvented by bringing in new suitors. The key to the transaction was the Fed's purchase of $30 billion in housing debt issued by Bear Stearns (they call it a loan, but it's really not -- since the Fed gets repaid only from the income of the portfolio). Without the derivatives guaranty and the junk debt purchase, Bear Stears would have been completely worthless when markets opened on March 17. Any complaints about erosion of shareholder value should best be directed to the accountants and rating agencies who failed to red-flag the implications of the Bear Stearns derivatives exposure and debt burden.
Oh come on anyone who's been making over 50K in this country has been getting robbed by the government to pay for other people's retirements (soc. sec.) healthcare, roads, etc and then everyone shouts corruption when the government supports them to help the overall economy's basic foundations hold....Oh, please. In that case we should tell all the crack addicts and high school dropouts tough luck you, screwed up, the public shouldn't pay for you either.
Nice to see the Prince focus on the struggles of the less fortunate among us.
You want all the upside when you win on taking big risks, but you don't want to absorb the downside when you make mistakes? The public should not be bailing you out! You risked, you lost. Now the public has to pay for your retirement.