At the end of the day Friday, Bear Stearns’ stock market value was more than $3.5 billion. Over the weekend — today in fact — JP Morgan Chase has announced the acquisition of Bear Stearns at just $236 million. What happened?
The Fed has over the weekend just announced another surprise drop in its basic funds rate by another 25 basis points.
I just returned from Europe today where I secured for a friend 500 Euros cash because she is going on vacation to Europe in April and wants to protect herself from further deterioration of the dollar.
I had to chuckle on Friday when I saw Treasury Secretary Hank Paulson’s comment that U.S. policy is to support a “strong dollar.”
There are many things at play at once right now regarding the global economy and why an arbitrage between the nasty geopolitical situation has finally begun to seriously drag down economic realities. For a long time, these two arenas were ‘decoupled’ — but no longer.
I’m drawn to an October 20, 2003 article, “The Debtor’s Empire“, by former IMF Chief Economist Kenneth Rogoff. America is in a nasty economic mess at the moment and power is shifting to new quarters — to those with oil, gold, dollars, and Euros.
America’s power flows cynically through massive debt instruments and the Pentagon — and that’s just not enough to really be what Madeleine Albright called “the indispensable nation.” What a moment of hubris.
— Steve Clemons


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