A week ago Bear Stearns' CEO Alan Schwartz went on CNBC to say that his investment bank's credit was good. But he hadn't read his Walter Bagehot, who
waggish remarked in 1873, 'every banker knows that if he has to prove he is worthy of credit....in fact his credit is gone'. How true, how true in Bears' case. After saying he was credible and worthy of credit his own words bit his arse, and within 5 days Bear was picked up at a fire sale's price of us$2 a share by Jaime Di[a]mon at JP Morgan. The sale was a steal to say the least and set markets tumbling around the world, and forced Herr Bush's toilet attendant Ben Bernanke at the Fed to cut the lending rate more and cough up us$30 billion to guarantee the Bear sale whilst keeping JP Morgan out of debt's way. The US market rose slightly...some 20 points and the bankers breathed a sigh of momentarily relief. Now the morning press talks of Jaime Di[a]mon as a true heir of JP Morgan without the philanthropy, but it also lets the cat out of the bag he has a fund of us$6 billion to ward off the endless lawsuits challenging his keen practices by buying Bear Stearns. If he has us$6 billion for lawsuits why do the Fed guarantee him us$30 billion and keep him safe from harm's way? These are the questions which may never be answered, but surely should be raised to challenged raw, unbridled laissez faire capitalism
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