CHAN AKYA
Trust goes down
the drain
The acquisition of Bear Stearns by JPMorgan Chase at a knock-down price of $2 per share means investors cannot trust the reported book value of US financial firms any more. And if they cannot trust investment banks, can the trust of commercial banks be really all that higher? The Fed and other central banks should now understand that the bailers themselves may need to be bailed out in time.

Asian stocks plummeted on Monday after the weekend purchase of Bear Stearns by JPMorgan Chase (figures at market close):

Nikkei 225: -3.71%
Hang Seng Index: -5.18%
Shanghai Composite: -6.34%
Sensex 30 Index: -5.75%

CREDIT BUBBLE BULLETIN
The worst-case scenario - live
The Fed's failure to forestall a run on Bear Stearns indicates that the US financial crisis has attained alarming momentum, with confidence in leveraged securities finance possibly irreparably damaged. The worst-case scenario is unfolding before our very eyes, and it all imparts a bad feeling.
Doug Noland reviews the previous week's events each Monday.

Bad news for
tax revenues
As over-bought, over-promised, over-leveraged, over-the-top idiocies collapse all around us, losses on this scale are the worst kind of bad news for tax revenues and governments and recipients that depend on them. The Fed has created so much fiat money, so much credit for so long, that you must be brain-damaged even to hope that it will not end badly.

Financial Credit Crisis
Global Markets Off Sharply
Dollar Sell-Off Gathers Pace
Fed Acts to Reassure Markets
Bernanke Plays `Whac-A-Mole' Bear Stearns Fire Sale
JPM Buys Bear for $2 a Share
In Crisis, It's Dimon Once Again
Did JP Morgan Overpay?
Fire Sale at Bear, Panic at Fed