Somehow, the BS abbreviation for Bear Stearns seems appropriate.

The rising tide of inflation does not lift all boats equally.

So well said. The rising tide of inflation is actually a tsunami, and will inundate all equally. I lived in Brazil for a couple of years during their chronic hyperinflation -- but was shielded because I was paid in American Dollars which were actually worth something then. Interestingly, Brazil also once had a valuable currency -- but that was a long time ago.

It seems that under chronic hyperinflation, money ceases to have much meaning, and as much as possible things revert to barter. It certainly did not stop the growth of the population, and there wasn't mass starvation, although the bottom tiers of the economy were (and are) pretty desperate.

I think the point is that we see that the govt's going to use the printing press a la Weimar. Yes, of course, there will be repricings within that.

Underlying all this is the massive devaluation of suburbia and all that depends on it (i.e. everything!) because of the increasing price of energy.

There are strong parallels with Germany in the 20s and 30s, although the order in which things are unfolding here is different. And Germany's resource problems were not because of geology, but because she lost WW1. Ditto her debt problems. But the debt and resource issues were in very broad brush the same. War and fascism were the "solution". We're already at war. The "problem" has been that the economy's been more or less ok -- til now. Will opposition to war (and wider war), timid as it has been, hold up in a depression? Or will depression supply the lacking cannon fodder?

Whom ever buys Bear Stearns must assume their expected loss for this year

Yea, sure. Just like the losses of LTCM or Silverado were covered and none of the creditors took it in the shorts.

Ron, what you wrote may be correct, but it depends on how the deal was structured. A stock deal that leaves Bear Sterns as a subsidiary would not necessarily obligate JP Morgan to do anything else. An appearance would be created. However, unless the deal requires a huge capital injection, assumption of debts or an actual merger, only the assets of Bear Sterns are available to its creditors.

Hard to say what is happening, but to the extent that Bear Sterns is a counter party to derivatives held by JP Morgan, Morgan may have done little more than buy itself an inside seat at the liquidation as some deals get unwound and other get get settled for pennies. Preferential treatment IIRC is an "act of bankruptcy" but a rational trustee would probably view keeping the big players alive as a priority.

Right - BS did not declare bankruptcy, so their liabilities remain.
It's different from when Refco went bankrupt - then the creditors had to sue for money owed.

How can 97% of the value of the a company simply go up in smoke? Isn't this what the SEC is for? How messed up must their accounting be in order to let something like this happen? If they're having trouble, shouldn't it be a gradual decline as more and more information comes out?----This is why I don't like stocks, way too unpredictable. People give me a hard time for being in commodities, but I think stocks are even more chaotic. As an example, remember when Shell had to revise their reserves several years ago? There is no way for a shareholder to know what's going on behind closed doors.
Philip