The Bears Stearns buyout......

[8FillTheHeart]

Is this going to impact the way you invest your $$?

I have been listening to the news this morning and I am just mind-boggled trying to sort out the implications of this and the Asian market.

[Soph the vet]

We'll probably just ride it out for the long-term. I have been nudging my dh to look at investing in coinage (gold, silver) as it is our only legal currency under the constitution and the value goes up as the dollar goes down from what I understand. My question is, why does JP Morgan get to buy Bear Sterns at 2.00/share and can we do that too:D?

[Jane in NC]

Is this going to impact the way you invest your $$?

I have been listening to the news this morning and I am just mind-boggled trying to sort out the implications of this and the Asian market.

Last night at the hockey rink I was chatting with an investment banker who compared the subprime situation with the savings and loan fiasco, shrugging his shoulders at it all. I told him that I just look at the empty condos which are half built and abandoned in the area where I live (ugh!) and wonder why lots are being cleared to construct still more mega houses and condos. Who will be buying this stuff?

He decided to go to the warm room at this point--probably tired of living, breathing and talking banking with everyone he encounters.

This will most likely not alter the way we make investments in the long term. This probably will alter some economic choices we make in the short term. I have a CD turning over this week and learned that a basic money market account at this institution was paying more interest than the CD. My service person thinks interest rates will bottom than shoot up like in the '80's--that savings and loan debacle again.

I sometimes feel like all of us support the lifestyles of bankers who push the envelope outside of what regulations and common sense permits.

Jane

[8FillTheHeart]

What confuses me is that it appears that it is actually a Fed buyout or at least Federally funded through JP Morgan. Why JP Morgan?

[Stacy in NJ]

What confuses me is that it appears that it is actually a Fed buyout or at least Federally funded through JP Morgan. Why JP Morgan?

JP Morgan is a Bank and has the capital assets for the transaction. The whole transaction is being underwritten (guaranteed) via the FED. JP Morgan held/holds the largest portfolio of subprime mortages. They wrote down nearly 80 billion in losses in prior weeks. Keep your eye on Goldman Sachs. They'll be writing down significant losses this week.

To answer your eariler question: Last year we reallocated most of our capital assets into T-bills.

[Sara R]

Don't believe the CPI numbers. I'm not a government conspiracy type, but those numbers are just ridiculous. No inflation in February? I guess they are trying to fool people who don't do their own grocery shopping.

All of these buyouts, interest rate cuts, and "stimulus packages" lead to a greater money supply, which leads to a falling dollar and massive inflation. Other countries whose currencies are linked to ours are talking about decoupling from the dollar, which is really bad for us. Good for them. Then our dollar is free to fall without affecting other countries, which will increase our prices for everything and diminish the value of money in the bank. Ugh.

We got our Roth IRAs out of the market last week. You can withdraw your contributions at any time without penalty, by the way. We had just barely opened them last fall so the earnings were all gone by now anyway. I really think at this point it would be better for us to put that money into safe things like the mortgage, or like food storage (we're Mormon) and pre-buying future needs for items where prices are bound to go up, rather than letting it sit in a falling stock market. We hope to be able to contribute to the stock market later from a stronger personal financial position.