This is bad

JP Morgan is buying Bear Stearns. For $2 a share. This is not a firesale. This is a volcano sale. Or whatever is more intense than a firesale. JPMorgan is paying $236 million. That's chump change. All of the marble and artwork in the Bear Stearns HQ is probably worth several million. Apparently Bear Stearns was effectively bankrupt last Thursday. So JPMorgan is basically buying the physical assets, they're not even paying for any of the cash that Bear has in its bank accounts. They're not paying for that cash because, apparently, there isn't any. The price is at a 93% discount to the price of Bear's stock at the Friday close. That is just unheard of. Even Enron took a while to completely collapse. JPMorgan is doing the world a favor buying Bear. They are keeping the world's financial system from going kaflooey. I don't know much about how Bear Stearns is integrated into the financial system, but if it went bankrupt, more than a few people would panic.

Things are going to get worse before they get better. There will be more than a bit of schaudenfreude at work here, as people who don't work on Wall Street take a certain perverse pleasure in watching people in expensive suits lose their jobs.

This may have an interesting effect on the Democratic presidential race, because Hillary, after all, is the Senator from New York. And that ain't going to be a good thing in the immediate future.

This will be one of those times which test the fiber of American democracy. I have a theory that the system of American democracy is designed to sustain the maximum damage that can be inflicted on it. Because everyone in this country has, theoretically at least, an equal opportunity to participate in the system, everyone has, again theoretically, an interest in preserving the system. This will be one of those moments when people with a vested interest in the system are going to have to band together to protect some elements of it. This will not threaten the existence of this country, but it is going to have a much wider impact than many people suspect at the present. This is going to be bad.