On Sunday, March 16, 2008, the Federal Reserve agreed to give JP Morgan Chase Bank 30 Billion Dollars in tax payer money, so JP Morgan Chase could buy Bear Stearns for 1 Billion. For those who didn’t know, Bear Stearns, one of Wall Streets largest and best known investment bank was bankrupt. Bear Stearns owed more debt than it had in value. Sounds familiar. Kinda sounds like, many people in Foreclosure. Actually, it also sounds like many homeowners not in foreclosure, who have a mortgage loan greater than the value of their home. But I digress. Bear Stearns was in financial trouble because they were worth nothing on paper. So we heard in the news “Bear Stearns must be saved.” Why? “Because if Bear Stearns went under than the whole financial system could have fallen apart. ‘COULD HAVE. The stock market would have plunged. Big investors would have lost lot’s of money. There would have been a world crises.”

Now let’s think about the logic one more time. This is my take:

First: Bear Stearns was about to file for bankruptcy because…THEY WERE BANKRUPT.

Second : The Federal Reserve determined that If Bear Stearns fails we will have a World Wide Financial Crises.

Third : The Federal Reserve “saves the day” by essentially GIVING JP MORGAN CHASE 30 BILLION DOLLARS OF TAXPAYER MONEY so Chase could buy Bear Stearns for 1 BILLION.

Fourth : The Federal Reserve, JP Morgan Chase, Bear Stearns, and All the Kings Men shake hands, hug, pat each other on the back, exclaim “JOB WELL DONE” b/c the WORLD DID NOT DESCEND INTO FINANCIAL CHAOS.

Do you see what just happened? What can does it mean?

No# 1 : There are certain people and businesses TOO IMPORTANT to let go Bankrupt even WHEN BANKRUPT.

No# 2 : The Federal Reserve DOES NOT NEED PERMISSION to give taxpayer money away to a BANKRUPT BUSINESS.

No# 3 : The Threat of a World Wide Financial Crises is a REALLY GOOD EXCUSE.

No# 4 : It doesn’t take a genius to figure out WHO GOT ALL THE MONEY.

No# 5 : The workers at Bear Stearns, who saw the value of their IRA’s or pensions drop because their Bear Stearn’s stock tanked, WATCHED their MONEY they PAY IN TAXES given to…Well let’s say it WAS not given to them to SAVE THEIR IRA’s or PENSIONS.

Truth be told, it is entirely possible that had Bear Stearns failed, there would have been a financial crises. It is also true that if Bear Stearns failed, there would NOT have been a financial crises. As is everything in life that could have been, WE WILL NEVER KNOW.

So the rules are made and when things get BAD there is only one Sheriff in town and that Sheriff has friends to protect.

This is history repeating itself over and over. DO FOR YOUR FRIENDS AS YOU WOULD DO FOR YOURSELF. There are those who claim that the bail out of Bear Stearns created a “moral hazard” because big banks will take even more risks since the Federal Reserve will cover their behind.

And cover their behind they have. For the first time in history, the Federal Reserve allowed Wall Street Investment banks to borrow money from the Fed at a discount (window). The rule has always been ONLY federally chartered banks are allowed to borrow money from the Fed at a discount (window). Wall Street investment banks were NEVER allowed until NOW. And by the way…that your taxpayer money too. It doesn’t end there, the Federal Reserve gives Wall Street investment banks Treasury Bills (your money) in exchange for Wall Street Investment bank’s BAD PAPER. It has just been said – YOUR MONEY FOR BAD PAPER. The paper that consists of collateral debt obligations, sub-prime mortgage backed securities, alt-a mortgage backed securities, credit card backed securities, auto loan backed securities…and the BAD PAPER list goes on and on and on…..

It all boils down to one thing. When it all hits the fan, the Big Bank’s Peoples get together, handle their business and do what is necessary to keep their stuff together.

The question for you is “Will Your Peoples Come together When it starts to get BAD”.