The SEC has it backwards

The SEC has it backwards

But by keeping interest rates below the rate of inflation for three straight years starting in 2002, the Fed created a bubble in the housing market. That bubble has now popped, leaving in its wake a severe liquidity crisis.

Is your money safe if your bank goes belly up? The Federal Desposit Insurance Corporation (FDIC) insures you in case the worst should happen… but only up to $100,000. So, what happens if your account exceeds this limit?

The federal budget deficit hasn’t received a lot of press lately, what with all the worries about the U.S. financial system, the home mortgage market, and the rescues that might be necessary to save both.

If you think the “Lost Decade” Japan endured during the 1990s was deep and painful, stick around: As the global financial crisis that was jump-started by the meltdown of the subprime mortgage market continues to unwind, the U.S. economy is headed for a financial Ice Age that will make Japan’s 10 wasted years seem like a single chilly night.

Unlike Dorothy in “The Wizard of Oz,” the brutalized U.S. banking system will never again return to that comfortable, cozy, and cushy capital place it once happily referred to as “home.” But its “Wicked Witch” was its own greed. The curtain has finally been pulled back on the machinery, and the hot air used to pump up the U.S.

Sky-high crude oil prices and gas prices are becoming something of a national obsession. They’ve also becoming the mother of all political punchbags. Washington’s finest are scrambling over each other to be seen as championing ‘ordinary Americans’ over the big, bad oil companies and, even worse, the oil speculators.

Price is what you pay, value is what you get. Those words aren’t mine, they belong to Warren Buffett. For now though, they remain incredibly relevant to the type of investment environment we’re in.

March 26 (Bloomberg) -- On March 14, a Friday, the market believed that Bear Stearns Cos. was worth $30 a share.

Say what you will about Bear Stearns on that day, you can't say that it was flying below the radar. It was as intently scrutinized as a public corporation can be, by some of the shrewdest people on our planet, and perhaps some smarter people from distant planets, too.

Whitney Tilson on the housing market... He thinks we are just in the beginning of it. He's shorting the financials!

Perhaps this is why Bear Stearns isn't trading closer to $2.

Bondholders can use options to hedge a stock buy, and effectively buy the right to vote in favor of the deal for $0.35 per share.

A poll on the reason why Bear Stearns is trading way above the offer price of $2.00 per share (or $2.34 offer based on the closing price of JP Morgan on 3/18/08). Please vote, and if you have any other theories make a comment.

The always sharp Jeff Matthews is worth a read:
"And while investors speculate there will be other, even bigger players disappearing shortly, we here at NotMakingThisUp suspect the worst of the liquidity crisis is past, or at least well-discounted by investors, here in the United States.