Loans and Finance

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Monday, March 17, 2008

Bear Stearns Sold For 6%

In a rapid chain of events, following on from last week's announcement that Bear Stearns needed emergency funding from JPMorgan, it has been announced that JP Morgan has now bought Bear Stearns for $240M.

This represents a mere 6% of it market value.

The fact that this solution and deal was put together over the weekend, says much about the speed at which American financial institutions react to and resolve problems and crises.

The Fed will reduce interest rates by 1% tomorrow. However, the Bank of England and ECB will continue to sit on their hands and do precious little.

The proactive approach says much about how the equivalent British financial institutions and government do not react to, or resolve, similar problems.

The consequences of the UK government's, the FSA's and Bank of England's indecision and dithering over the Northern Rock debacle will be burdening the British taxpayers for years to come. Thousands of Northern Rock jobs will be lost, and the credibility of our financial system has been shattered.

Regrettably, as long as Brown (the man who created the tripartite system) is in charge, the lessons will not be learned and another Northern Rock will occur.

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