Yes, that headline is a quote from the wisdom of Billy Ray Valentine, former star of that once-great Philadelphia commodities brokerage, Duke and Duke. Sorry, but with me, analysis of financial matters doesn’t get much deeper than that. That quote popped into my head yesterday morning as I was observing, with my PDA brower set to the WSJ site, the reaction on Wall Street to the Bear Stearns bailout.
The latest word is that the crisis has been averted, or delayed, for what that’s worth.
I must confess that, since I get a bit confused just following what Winthorpe and Valentine did to the Dukes at the end of "Trading Places," I hardly know what to think about this supposedly Earth-shattering set of events surrounding Bear Stearns.
This is a barrier to my reading the news stories about it. As an editorial page editor, I read with the constant question in my mind, "What do I think about this?" I read any news story skimming past most of the who, what, where and blow-by-blow stuff, looking for answers to specific questions that will help me come to a conclusion.
But I don’t find answers even to the preliminary questions that occur to me regarding the buyout of Bear Stearns, such as, "When people go to work in the morning at Bear Stearns, what do they do?"
I do get a little more sophisticated than that. I also ask, "Why did the Fed deem it necessary to prod J.P. Morgan Chase to buy out Bear Stearns?" And wasn’t there something really unseemly about the government helping one financial firm buy out another at $2 a share? (I am reminded disturbingly, and almost certainly irrelevantly, of the case I read about recently regarding the Manhattan Elevated Railway, which Jay Gould bought at a fire sale price in 1881 after a judge had helped run down the value of the stock — young Theodore Roosevelt built his early legislative career largely on the basis of fighting such deals.)
What would have been the awful thing that would have happened had the bailout (or purchasing at a ridiculously low price — which seems to me like a really, really different thing from a bailout) not occurred? And why did the markets panic so AFTER it occurred? Was it because having the Fed invest $30 billion on behalf of you and me? Should I be freaked out, too? Should I be pleased or ticked off that the nation’s central banker exposed itself like that for the sake of one company?
What does this mean to us average Joes? Are we going to be more or less likely to buy our little boys the G.I Joe with the kung fu grip? And will anything ever happen on Wall Street that will get me that 52-inch HD TV with 1080 resolution? Let’s get real here, people.
But the people who allegedly know the answers to these compelling questions just drone on and on in a language of their own…
Related Posts
Here’s a bit of trivia that I do understand: When "Trading Places" first came out, one of many things I enjoyed about it was that I immediately recognized its plot as been derived from two Mark Twain stories I had always loved — "The Prince and the Pauper," and even more, "The £1,000,000 Bank-Note."
But I don’t think I’ve ever seen anyone else make that point.
Grandpa, that’s because we’re busy with the pressing dilemmas like teachers dying their hair green for Patty’s Day. Good thing Principal Byers was there to put a stop to the crisis facing Rich One.
Because perception = reality, the government can’t allow financial institutions to fail.
The trick is to keep trying to convince people things are better than they really are until they (hopefully) get better.
That’s the point of the cash giveaway coming in May… spend now, pay later. Keep the plates spinning until the next election and then pin the blame on the Democrats when the economy tanks next January.
The easiest way to solve our fiscal crisis would be to institute fiscal policies that limit government spending. But instead we’ll keep spending what we don’t have on what we don’t need.
The Democrats are to blame for this stock meltdown.
* Prospects of socialists Hillary or Obama and their pledge to raise taxes on corporate profits, dividends, savings, investment and medical treatment threaten to cut the value of most stocks in half.
* Democrats have already passed legislation raising taxes back to the Clinton levels, set to take effect on working Americans in Jan 2009.
* It was the Democrat’s under Clinton who brought on a recession in manufacturing in 1993 that has not abated, with their increase of personal income taxes from 28% to 42%.
It is silly to hand out money to stimulate the economy while raising taxes by several times that amount.
If the Fed is going to step in at all on the Bear Stearns matter, it should have insisted on orderly liquidation of the company. The stockholders have already been almost wiped out; other holdings should be bought up or marked down to their market values. Bernanke and company have just bought time for the market; the real reckoning is still to play out.
As long as Bernanke and company are printing more funny money (U.S. dollars),lowering intrest rates and causing the dollar to go down. This will make everything go up. Look in the stores and at the gas pump,but the feds say this is not counted.We are in deep trouble and none of the people running for President can get us out of this mess. If they keep tanking the dollar we will be in a depression for 20 years just like 1929.
You’re right David, and the sad fact is that Obama, Hillary and the Democrats want to double the deficit and increase tax rates to the levels which put us into the last recession in 2000.