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    OH HAI! IM STILL IN UR CAMPAIGN, PRAYIN 4 ARMAGEDDONS..., 2008-03-14 21:11:49 | Main | "the continent must in the end be conqueror"..., 2008-03-16 00:24:03

    take your place at the end son, we'll get to you one by one:

    For the third time in a decade, Bear, Stearns & Company is demanding tens of millions of dollars in tax breaks and other subsidies from the city. ...

    In 1991, Mayor David N. Dinkins granted Bear, Stearns a package of more than $37 million after the company threatened to move employees to Whippany. Bear, Stearns then moved 1,500 employees to MetroTech. ...

    In 1997, a new mayor, Rudolph W. Giuliani, granted Bear, Stearns an expanded $75 million benefit package. The bank promised to build a new headquarters on Madison Avenue, keep at least 5,700 employees in New York City for the next 50 years and create at least 13,300 new jobs over the term of the deal. Bear Stearns was one of 50 companies, including The New York Times, to get a benefits package from the Giuliani administration. ...

    According to city records, Bear, Stearns has received more than $25 million in sales tax breaks and millions more in property tax abatements and low-cost electricity related to its offices at MetroTech.

      --The New York Times, Bear, Stearns Threatens Again to Leave City and Seeks Third Set of Deals to Stay. 12/2002.
    Of our 275 corporations, 269 received stock-option tax benefits over the 2001-03 period, which lowered their taxes by a total of $32 billion over three years [between 2001 and 2003].
      --Corporate Income Taxes in the Bush Years, CTJ, 9/2004 [pdf]

    Bear Stearns got a $399 million cut of that $32 billion over those three years, roughly equal to a year of their profits.

    Bear Stearns Cos., facing a potentially fatal liquidity crunch, borrowed an undisclosed sum from the Federal Reserve Bank of New York that allowed it to stay in business. ...

    Other Fed moves already have pumped $236 billion into banks, broker-dealer firms and foreign central banks.

    A "loan". How the fuck did all these worthless IOUs end up in my pockets? The world of finance truly is full of mystery and wonder!

    [T]oday the first one of these large broker dealers - Bear Stearns - in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

    So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up - like many other recent Fed actions - being paid for by the US tax-payer.

    [T]he Fed said it would swap Treasury notes on its balance sheet for privately issued mortgage-backed securities held by Wall Street firms.

    Willem Buiter, a London School of Economics professor and former Bank of England policy maker, called the Fed's move "socialism for the rich, which is both inefficient and morally objectionable."

      --Bloomberg, Bernanke Discards Monetary History With Bear Stearns Bailout, 3/15/2008

    I like how Buiter distinguishes between the two, I didn't realize it was possible for an economist to do that. Anyway, when are they putting my fat $300 check in the mail?

    update: For the purchase price of about $250 million JP Morgan has bought BS - which is only about half BS' profit margin last year. That undisclosed pricetag for the American taxpayer to smooth the way for this little transaction? A mere $30 billion!


:: posted by buermann @ 2008-03-15 17:53:02 CST | link





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