U.S. No Longer Epicenter of the Financial World

I know this is supposed to be a blog covering the biotechnology and medical industry, but in an unprecedented move for this blog, a major non-health related event will have to be commented on.

Bear Steans (BSC) was forced to sell itself to JP Morgan (JPM) for a whopping $2 a share, equal to $236 million in total! The company was worth over $20 billion just a couple of months ago, representing a drop of over 90%.

This followed the horrible day of trading on Friday after JP Morgan, with the help of the Federal Government, gave Bear Stearns a month long loan after investment firms and banks pulled their holdings from the troubled firm amid liquidity concerns.

Asian markets dropped big as soon as the acquisition was announced on Sunday, and Wall Street is bracing for another crash on Monday.

Firms around the world will be forced to re-analyze their investment assets in other financial firms, especially those based in the US, in order to stay ahead of a similar illiquidity problem that brought down Bear Stearns, and will be less motivated to invest new capital any time soon.

The dwindling economy, coupled with rising energy costs due to high demand from China and India, places the US in a situation never seen before; at the sidelines and not the epicenter of the financial world.

For those who think we are not in a recession, or at least the recession we are already in will not last too long, think again. We might very well be at the start of a long and gloomy couple of years.

Comments

[iThinkBig]

Might also have something to do with zero confidence globally in the U.S. financial system. International confidence will come roaring back with new Administration and Economists willing to stand accountable for their actions. Meanwhile the Middle Class will all become part of the poor class, meaning the U.S. government is coming for the wealthy people to tax the 5% up the yang to support the 95% poor.

Of course, no one is realizing the real truth of this article, because if they did Fed would be pumping $200B into energy (besides commodities further impovershing the real economy), the President would be declaring a national emergency and fiscally responsible banks would be underwritten by the SBA to create millions of jobs alt energy, offshore drilling and ANWR. Gues the President never heard of an executive order?!?! Oh, the President may want to release some of that strategic reserve now. What are they keeping it for? A war we can't afford with Iran?

Can any Administration be more obtuse and filled with the arrogant and greedy?

[scobbydube]

$2.00 a share for Bear, what a joke.. Bear should have just filed for bankruptcy instead of letting the Fed and JP Morgan make a deal like this.. There will be lots of law suits to follow - not that they will do any good.. I agree, how about bailing out Main Street instead of Wall Street.