Like you, I went to the New York Times homepage this morning hoping to read a charming story about Barack Obama's upbringing. Instead, I was bombarded with news that J.P. Morgan (along with the Fed) was bailing out Bear Stearns. Oh nos! And here I thought Bear Stearns and J.P. Morgan were the same company. (Not exactly true, but whenever bankers would tell me where they work, it was like you live in Murray Hill or Gramercy? Is there a difference?) I know what you're thinking. "What does this have to do with me? All my money is in credit card debt. And what does subprime mortgage even mean?" Well, funny you should ask, because subprime mortgages got Bear Stearns got into this mess.
Bear Stearns became successful by turning risky variable-rate mortgages given to people with questionable credit into securities that looked like safe, sure things to investors. But—shockingly!—all those mortgages collapsed, two of Bear Stearns subprime mortgage hedge funds broke apart over the summer, and now Bear Stearns is facing a "liquidity crisis."
J.P. Morgan is funding the company for the next four weeks, but it seems like that the JPs will take over Bear Stearns completely after that, and as a result some of your rich, rich friends will be out of work.
But again, what does that have to do with the price of tea in China, or really anything to do with your life? Well, rich people will be poor, so restaurants will be less crowded and maybe even rent will go down as bankers won't be able to afford Tribeca lofts. But whatever, who would want to live in Tribeca anyway?
It's Friday and Denton said I couldn't write about Spitzer anymore, so there you have it. Your dollar, whether in coin or bill form, will soon be worth nothing. Or even less nothing than currently.