Fascinating Times

So what's an appropriate quote for today ?

These are times that try men's souls.
--Thomas Paine, Dec. 23, 1776

Fasten your seatbelts, it's going to be a bumpy night"
--Bette Davis as Margo Channing in "All About Eve"

JPMorgan buys Bear for $2/share and assumes all the liabilities. JPM also gets a $30 billion put to the Fed for Bear's most risky securites. Obviously this is a great deal for JPM.

The Fed opens the discount window to all primary dealers under a special power for "unusual and exigent" circumstances. Good, finally Battleship Ben must realize that these clever but not fully charged Fed actions just weren't hitting the target. I suspect at tomorrow's open market commitee statement will announce the Fed will make outright purchases of mortgage securities, too.

As the paragon of finance and banking, J. P. Morgan, Sr. reportedly said in the Panic of 1907 when banks were griping about using their reserves, "use your reserves, this is what they are for." [paraphrasing]

Over three decades I've read many books describing financial panics and crises beginning with the 17th century Tulip Bubble, the 18the century South Sea Bubble, the Panic of 1819 [interesting, a land speculation bubble !], all the other 19th century panics, the Panic of 1907, the 1929-1932 Great Depression and the 1960s era Penn central collapse. I lived through the collapse of numerous brokerage firms (E. F. Hutton, Drexel), Penn Square and Continental Bank, Drysdale Securites, the Crash of 1987, the S&L collapse, and LTCM and Russia defaults.

This one is not different. The risky and excessively leveraged firms collapse. I read today that in addition to its excessive exposure to structured securities, that Bear, Stearns had a heavily concentration of hedge fund prmie brokerage. That's a risky client base. And we see it relied excessively on overnight funding. Sheesh, short term overmight funding is really risky in troubled times. I wrote about that firm's leadership culture over the weekend. So this collapse was never beyond possible.

So what to do ? There's blood in the Street. The Fed is doing the right thing ... liquidity ceases to be an issue.

Survive. Protect Yourself at All times. And if you have cash, buy slowly.

I am still selling gold & silver and buying stocks. One good thing about owning physical gold & silver is that it takes weeks to sell a lot. So I get many bites of the apple and the time diversification is wonderful. I will be selling more tomorrow, as I need to give my metals dealer a breather. I posted some Krypto Fund exchanges yesterday.

If you are on margin, protect your best postions. I've sent some more cash to my Alpha Fund accounts ... just in case. Don't get a margin call ... sell a bit of positions that might profit less from the turnaround. Frankly, I'm considering selling my last oil stocks [DVN and CVX]. I wonder how much higher they can go as oil is now at $110. No decision yet but the fact they are stalled not too far from highs is tempting.

Word of the Day

Eidetic - adjective [$10 ! sheesh, I would have guessed at least $100]
Eidetic means (of a mental image) having unusual vividness and detail, as if actually visible.
Sentence: Bunkerman is having eidetic memories from his investment banking and investing career of prior brokerage collapses and financial panics.