JP Morgan pays $240 million for Bear Stearns...

making Bank of America's purchase of Countrywide for $4 billion look mighty expensive.  This news is not terribly surprising given that Bear was on the brink of failing on Friday until JP Morgan bailed it out with the Fed's guarantee.  Bear's CEO, reassured the markets at the beginning of the week by declaring that the firm had ample liquidity and $17 billion in cash.  This announcement sent a very strong message to the markets:  You'd better get your money out now while we still have $17 billion.  A wave of customer defections followed on Thursday and Bear literally ran out of money in about a day.  Let this be a lesson to all of you leveraged vehicles out there!  If you need to borrow around $150 billion a day to finance your $300 billion inventory of garbage (which was Bear's short term borrowings around year end), $17 billion in cash is chump change!  At any rate, JP got a good deal on a building in New York City (Bear's headquarters which they owned), although I'm thinking they're going to need to look for some new tenants...

Needless to say, tomorrow will be a very interesting day in the markets.  Looks like the markets didn't like this news one bit, as equity futures are down sharply.  The Fed may be forced into a 100 basis point cut in the fed funds target tomorrow, a day before the meeting if the market starts plummeting.  This time, we won't be blaming it on Jerome Kerviel...