I suspect it was:
NEW YORK, March 24 (Reuters) - U.S. stocks jumped on Monday after a raised buyout offer for Bear Stearns Cos Inc suggested that financial stocks may have reached bottom, especially in light of fresh data that fueled hopes for a turnaround in housing.
Stocks rang up big gains for a second straight session after JPMorgan Chase & Co lifted its offer for Bear Stearns to $10 a share from $2, helping alleviate concerns that other investment banking shares could tumble. JPMorgan’s move also relieved worry that a prolonged fight with disgruntled shareholders could have derailed the deal…
…A surprising increase in sales of pre-owned homes last month fueled optimism that the worst of the housing slump may have passed. That ignited a rally in home building shares.
“More write-downs are expected in the financial space, but people are starting to see a light at the end of the tunnel and they suspect that it’s not an oncoming train,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. “At $2 a share for Bear Stearns, the question was: ‘What were the rest of the financials worth?’”
In my judgement, the only people who know less about economics than capitalists are socialists, who de-facto know nothing about the subject. Only a capitalist and a socialist could possibly be surpised by a rise in pre-owned home sales…with prices dropping like a rock, the natural result is to bring into the market people who wanted a home, but couldn’t afford them when the prices were rocketing upwards. There is still a lot of slack in the market - here in Vegas we have a huge supply of foreclosed homes to go through - but I judged January/February as the bottom out/turn around of the housing market. Now, I won’t get my 100k in lost equity back for a few years, but I think we’ll start to see a gradual unpward trend in home sales and prices - with a resultant modest increase in home construction. As a general rule, I don’t believe in the “boom and bust” cycle of economics - except in homes sales, which seem to generate economic idiocy on an average of once every 20 years.
Be that as it may, our economy is fundamentally strong, and the only thing which could knock us back is a tax increase and/or massive spending increases…which, of course, are promised by Democrats, who are thus promising to kill the economy if elected. Keep that in mind as November approaches.
Tags: Housing Market, sub-prime crisis
March 25th, 2008
From NRO’s The Corner:
JP Morgan Chase + Bear Stearns
A great old firm got bought out today for peanuts. I was a partner before and after the Reagan administration. A sub-prime credit casualty.
Paulson and Bernanke have done exactly the right thing. It was a run on the bank. The Fed stopped it right there. No banking crisis.
The big Wall Street banks are in good shape, even with earnings losses they’re still well capitalized, profitable and solvent. Fed stopped it from spreading on Friday; JPMorgan takes them over tomorrow.
The Fed cut the discount rate today by a quarter point. It will reduce target the fed-funds rate on Tuesday. The banking system will function fine. That’s the key.
Paulson was good on the talkies today, emphasizing confidence in the banking system. He’s a capable guy who is working the phones and is in touch with everyone This is how to stop a crisis. Bush was right to put on an optimistic face on Friday in my interview and later in his speech to the N.Y. Economics Club.
Senator Schumer is calling Bush “Herbert Hoover.” But Hoover signed protectionist Smoot-Hawley, just as Hillary and Obama are today trying to break up NAFTA. Hoover signed a huge tax increase, just as Hill-Bama are preaching. The Dems are emulating Hoover. Bush is trying to stop it.
But the administration should be pushing for a strong dollar. That would help.
That is the one thing missing - the push for a strong dollar. On the other hand, the rest of the world will likely start to shore up the dollar pretty soon - a cheap dollar means exporting to America is getting vastly more expensive. For all the Euro-zone’s chest thumping about the Euro’s value vis a vis the dollar, they never really wanted it to be significantly more valuable than the dollar because a strong Euro means Europe has a harder time exporting to us, and a harder time keeping out US exports. Same thing with China, Japan - heck, the whole world. No one wants to be shut out of the US economy, and the falling US dollar is making it harder and harder to sell us stuff, while making it easier and easier for us to go the other way.
One of the best things we could do for strengthening the dollar would be to make the Bush tax cuts permanent - part of our problem is that foreign investors see HillBama and worry that next year we’ll see a very massive tax increase, thus making returns on US investments much smaller…so, much better, for now, to put the money in Euros, gold and oil futures…our task is to drag that money out of those three shelters from potential Democratic tax hikes.
Tags: Bear Stearns, JP Morgan, sub-prime crisis
March 17th, 2008
