Can someone explain how allowing JP Morgan to buy Bear for $2/share will save the market?

[brentspeak]

The Federal Reserve bank is acting as a negotiator and fund raiser for this bailout/buyout, but how could anyone's confidence in the market be shored up by this?

[Vincardog]

1. IT is a CYA move by the brain trusts that got Bear into the mess. Risk Capitalism

They get the profit you pay the risk. Is it FASCISM yet?

[DemocratInSoCal]

2. Because The Corporate WHORE Media Will Say So

CNBC will be on the air in the morning, talking EVERYTHING UP.

Otherwise, they'll have their SURPRISED, CONCERNED look.

"IS THIS THE BOTTOM???" They will ask all day long.

NOOOOOOOOOOOOOOOOO!!!!!!!!!!! IT IS NOT THE FUCKING BOTTOM, YOU PIECES OF MEDIA DOGSHIT!!

[aquart]

9. Bear got itself into this mess.

Don't ever think this bunch of deliberate criminals are innocent woolly lambs. Their hierarchy should have done time 12 years ago. Instead, they went their merry way, changing nothing.

on edit:I think I meant this as a reply to #1. No idea why it landed here.

[Speck Tater]

3. It won't help confidence, but...

Bear Stearns owes a lot of money to other banks. Now JPM will pay those bills, thus preventing those other banks from coming up short of cash themselves.

If one bank fails to pay it's debts to another, then the second bank won't have the cash to pay it's debts to some third bank, and the dominoes really start falling in earnest, and many of these debts are very short term, like overnight, or a couple of days. Since JPM will now pays BS debts, those other banks will not also collapse. At least not today.

[Warpy]

5. Thanks, that's probably the best layman's expalanation I've seen

[brentspeak]

6. Good explanation. Thanks.

Like the other responders pointed out, it looks the public is going to suffer for the malfeasance of the Wall St. greed-meisters.

[Indiana_Dem]

8. so will cash be king? or will it be worth nothing?nt

[Yavin4]

10. However, Just Because This Hole In The Boat May Have Been Plugged

That doesn't mean that there aren't other holes waiting to bust open, and it won't be that easy plugging up future holes.

[soothsayer]

15. ahem, the Fed gave JPM money to buy bear, so it's all a bit of a ploy

to boost confidence

[keep_it_real]

4. It won't; the Dow is down 200 plus; the hand writting is on the wall.

The dollar is tanking; store food to trade instead of dollars.

[WillowTree]

7. That alone won't save the market.

But allowing a major financial institution like Bear Stearns to go under can only make things much, much worse.

[kentuck]

11. It won't.

But it will save the biggest shareholders...at taxpayer expense.

[Speck Tater]

14. At the price BS was purchased...

major shareholders in BS will get something like 4 cents on the dollar. They are not exactly "saved".

[HuffleClaw]

12. seems like a shell game to me

simply shifting some assets between the ultra-rich with federal approval. sickening.

[clixtox]

13. Apparently JP Morgan/Chase...

is using federal money to pay.

BearStearns opened above $56/share on Friday morning, closed at about $22/share Friday afternoon at 4PM.

Somehow BearStearns shares lost most of the rest of their value on a Saturday!

A very busy weekend for the titans of capital...

I love the smell of napalm in the morning, it smells like VICTORY!!!

[BluWtrLynn]

16. The alternative was bankruptcy.

That would in turn have resulted in another ENRON scandal. Now the stockholders have far less recourse. Not the way GWB wants to be remembered no sir! Who would build his library then?