Everyody is buzzing this morning about JP Morgan getting Bear Stearns for $270 million, or $2 a share. But it is not $2 a share. It is $2 a share less the value of that $30 billion Federal guarantee. What's the guarantee worth? Ah, who knows? That's a function of the loss on the guaranteed deals. If they are all worthless, the guarantee is worth $30 billion. If they are only 10 percent worthless, Morgan is getting Bear for free, with a $30 million boot.
So chalk up one for the first great winner of the second Bush recession: when the going gets tough, give some tax money to JP Morgan.
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