.... so this morning the "big news" is that now JPM/Chase is trying to work out an increase in their bid to $10!

Wait - bidding against themselves?

Uh, no.

See, it appears that Bear managed to stick a nuclear bomb (and its ticking!) in the "merger agreement." That, being a clause that survived even if the deal failed to close that obligated JPM to guarantee some of Bear's liabilities!

Oops.

Rumor is that Dimon was apoplectic when he discovered this and suddenly there was interest in renegotiation.

No, you think?

Needless to say this sort of thing is just more evidence of the raw malfeasance of involvement of The Government in this whole thing. On CNBC this morning we had a rare bout of "truth telling", which is that "Mr. Market" is going to get very unhappy with this sort of intervention-and-arm-twisting in a big hurry, and that The Fed apparently told JP Morgan to pay no more than $2/share, although there are conflicting reports in this regard - Liesman claimed that this has been "denied" (yeah, I'd deny it too, given that Bear isn't a Fed-regulated entity such a claim, if true, could get kinda interesting - like perhaps illegal-style interesting? Not that the law seems to bother any of the fine folks in our financial system nowdays, whether it be raw market manipulation or otherwise!)

In addition the usual practice when The Fed (or the FDIC) gets involved in a "forced merger" is that both the bond and stockholders get zero, or at least common stockholders get zero while bondholders get only residual value once the debts are paid off.

In this case we have an entirely different matter - The Fed basically came in and "crammed down" the transaction with the apparent inclusion of a bribe!

Oh, The Fed needed to step in and do a "cramdown" at $2/share eh, and thus they "greased the skids" with $30 billion smackers? This ought to be some awesome lawsuit fodder when there is now a renegotiation at five times the original price.

I can't wait to see the process servers show up at Ben's house - they're going to have to install a "take a number" box at his front door on this one.

Far from being a reason to rejoice that "the market worked anyway" this is just more fuel for the fire in the petition to impeach Bush and Friends for their involvement in this.

Yes, I said more fuel, not less.

Why?

Because the issue in terms of legality is that $30 billion "no recourse loan", which is not in fact a loan, sure as hell looks more than a bit like a bribe to me, and that sort of gameplaying is against the law!

Oh, and the "amended terms" do absolutely nothing to change any of this - $1 billion to be born by JPM? Oh give me a break. And now there's not only a bailout for bondholders, but a $29 billion backstop to get something for the common stockholders as well?

THIS IS UNLAWFUL AS IT IS CLEARLY A BAILOUT ON THE BACKS OF THE AMERICAN PUBLIC; EVERY SINGLE AMERICAN JUST GOT THEIR POCKET PICKED TO THE TUNE OF $300 FOR BEAR STEARNS BOND AND STOCKHOLDERS, AND IT WAS DONE WITHOUT A VOTE BY CONGRESS!

As if this wasn't enough, this morning on CNBC Jim Cramer said, when it was brought up that this was in fact a picking of American's pockets to the tune of $300 each, that the common man does not know jack!

In other words, just to be straight with everyone, JIM CRAMER THINKS ITS JUST FINE IF THE LAW IS IGNORED AND YOU, THE COMMON MAN'S POCKET, IS PICKED FOR THE PURPOSE OF DIRECTLY SUPPORTING WALL STREET AND ITS OBSCENE BONUSES PAID OUT OVER THE LAST THREE YEARS WHEN WHAT SHOULD BE HAPPENING IS THAT THERE SHOULD BE **INDICTMENTS** AIMED AT EVERY ONE OF THESE FIRMS - AND THEIR EXECUTIVES.

(Oh, he tried to backpedal - again - yeah, right. Jim Cramer, you need to be stuffed in jail along with the rest of these monkeys. Oh, and a 300lb convicted murderer who as a consequence has a "free PUT" for his second and subsequent murders needs to be put forward as your cellmate too!)

Liesman was parading around reiterating that The Fed cannot buy other than Treasuries and Agency paper. Oh really? Just like they can't issue PUT options either eh Steve? It appears to me that what is written in the black letter of The Federal Reserve Act is merely a suggestion from time to time when that black letter law is inconvenient for them eh?

Never mind that now it comes out that BLACKROCK is going to manage this $30 billion "facility"! What the hell? Now we've got The Fed paying private companies to manage a facility for them on top of the rest of the apparent illegality, plus taking it OFF BALANCE SHEET so we can't see how well (or poorly) it is performing?

Or shall we talk about the rumors being leaked from alleged inside sources at The Fed that the "collateral" that Bear will be posting is so bad that you'd need a geiger counter to warn you off before getting within 10 feet of it?

So perhaps someone can explain to me how it is legal for The Fed to UNILATERALLY decide that the TAXPAYER will effectively pay Bear Stearns shareholders $10/share, plus insure that Bear's bondholders are whole?

IS NOT THE PROPER ROLE FOR SHAREHOLDERS THAT THEY BEAR FIRST LOSS IF YOU MAKE A BAD INVESTMENT, and BONDHOLDERS bear SECOND loss?

The proper government organ to get involved here is Congress, and as more details emerge its open to question whether even Congress has the authority to authorize what amounts to a bribe using (arguably) a public backstop!

Withdraw that $30 billion "PUT" Bernanke and I'll shut up on Constitutional grounds, but not in the general case of "making up the rules as you go along."

In short, no, I don't think all is ok in the world if the $30 billion is withdrawn, although that would remove the reason to ask Congress to perform its due diligence and perhaps bring Articles of Impeachment.

In fact, I believe that Bear shareholders have plenty of reasons to sue people from here to Mars, including quite probably Bernanke and Buds, and I encourage them to do so.

Oh, in other news there are also rumors flying around that the very same JP Morgan (and UBS) have disclosed values of some securities backed by mortgages have lost thirty to ninety percent of their value in a suit related to Canadian Asset-Backed Commercial Paper, which has been locked up for months. One wonders - were auditors "clearly informed" of all of this before they signed off on the 10Ks for 07 filed recently? Hmmmm.... if not, they are likely to be rather rough with certain people. Never mind the obvious - is a security "AAA" if it trades at 30 cents on the dollar? WHERE ARE THE COPS?

A better question for the financials and specifically the investment banks is simple - is the entire model of the investment bank broken? It sure looks that way to me, and I bet that one of the outcomes of this, especially next year after the election of a Democrat to the White House with a Democratic Congress, is that investment banks come under the regulatory authority of some government organ.

That will be the end of the 30:1 gearing and almost certainly the end of "off-balance-sheet" games as well; if they are forced to reduce gearing to somewhere between 8:1 and 15:1 and stop the off-balance-sheet crap somewhere between 1/2 and 3/4 of their earnings power disappears!

This means that all of them are not "generational buys", but are screaming sells as their P/E suddenly looks damn expensive on a forward basis.

Analysts for the S&P 500 are now expecting earnings to decline 5.5% in the first quarter.

Gee, the market is cheap eh? Hmmmm... not!

Did you see THAT reported on CNBC today? Nope! Nor will you.

This is, by the way, the ultimate problem with the market - its not cheap. It is in fact very expensive, because estimates are entirely too high, just as they always are going into recessions - analysts always are behind the ball and always keep their estimates far too high for far too long, leading people to make "the market is cheap" calls that are utterly without foundation in fact.

This is a mistake I have seen time and time again, and if you're foolish enough to listen to these crooners you're going to get murdered.

Oh, you didn't hear CNBC's "let's pump stocks instead of reporting the truth" talk about the Chicago Federal Business Activity Interest, did you?

Guess what - it came in at -1.04 .vs. the previous of -0.68.

Gee, is that good?

And while the "home sales" numbers were pumped the fact of the matter is that year-over-year home sales were down 23%. OF COURSE sales are up month-over-month as the start of the spring selling season has come and in fact every single February in history has been up over January, but the year-over-year numbers tell the truth!

Don't expect to see that on CNBC either.

Financial reporting? Forget it.

Oh, and if that's not bad enough, Wachovia is still advertising Negative-Amortization mortgages into a declining home price market.

And why not?

There is no risk to them, only to you the American Taxpayer through the actions of unelected officials who act to spend your money without bothering to gain the prior approval of Congress, as the Bear Stearns SCAM has now proven conclusively.

Nor does it stop with Wachovia. Now that The Fed is putting taxpayers on the hook without a vote of Congress authorizing that spending, look who else is interested in sticking their fingers in your wallet? That'd be Wells Fargo, backing up the truck to YOUR wallet via the public teat:

"I would not be averse to a Fed-assisted transaction," Stumpf said in a recent interview with the San Francisco Business Times. "Fixer-uppers don't bother us."

Absolutely, and so long as you don't have to take any risk because The Taxpayer has your back via an unlawful Fed "PUT" (yet another allocation of funds by The Fed without Congressional action.)

Who's next? Better not look behind the curtain at Fannie, as I've been warning for quite some time:

"...Fannie Mae fell $1.10 or 3.2 percent to $33.29. On Monday, the government-backed mortgage buyer reported that its serious delinquency rate for home loans grew 0.08 percent in January to 1.06 percent of its $2.9 trillion in mortgages."

Psst - that's a 7.5% increase in serious delinquencies in one month. Of course it wasn't reported that way; they instead reported very small numbers, instead of the actual percentage changes.

I wonder why not?

By the way, 1.06% is 106 basis points. You might want to take a look at the amount of capital they have in reserve against that book, and extrapolate out a few more months.... or quarters.

Make sure you're sitting down.

And no, I won't do the math for you - I've been handing out plenty of fish and teaching y'all how to bait those hooks, its time for you to wet a few lines yourself.

GET OFF YOUR ASS AND IMPEACH THE ENABLERS OF THIS THEFT OR I DON'T WANT TO HEAR YOU COMPLAIN ABOUT IT LATER - HALF OF YOUR SO-CALLED "STIMULUS" CHECK HAS ALREADY BEEN STOLEN TO PAY FOR BEAR STEARNS, AND THAT AND MORE WILL BE UP SHORTLY AS WELLS WILL BE JUST THE NEXT IN A LONG LINE WITH THEIR FINGERS IN YOUR WALLET, AND THEN YOU WILL LOSE YOUR HOUSE TO FORECLOSURE AND YOUR JOB IN THE RECESSION!

Trade and invest at your own peril; as things stand here and now there are no honest markets to play in, and if this bothers you (it should) either shut up and go to cash or get off your ass and do something about it.

That we're a nation of whiners is why we're here in the first place.

PS: The Fed's "facility" for JP Morgan and Bear has been set - they've been given 10 years at the discount rate. That's outrageous, and a raw violation of The Fed's base set of terms, which limits repos to 90 days, or six months for paper backed by agricultural commodities. Go sign the impeachment petition - now.