Today’s Rumor: Bear Goes Belly Up (Who’s next?)

A few years ago — around 2001-02 — I had strongly recommended Bear Stearns (BSC).

They had a great franchise, they had lagged the rest of the banking sector for no apparent reason, and overall, the quality of management under Ace Greenberg seemed to be terrific. The stock was $54-57.

Subsequently, Bear ran to $170+. I have long since been gone from the stock.

Today, we witnessed it complete the round trip as it careened through that $54-57 range. At one point, today, Bear was down $10, on a rumor that they were going to go belly up.

I have no opinion or special insight as to the truth of that . . . Hey, it could happen, it really wouldn’t surprise me, but I don’t know, and we have no position in BSC.

But that rumor raises a more interesting question: What companies could take the long dirt nap? Who out there is ripe to be absorbed, merged, taken over (hostile or not). There has to be a long list of mortally wounded firms out there that simply haven’t keeled over yet. What CEOs are dead men walking?  What stocks are waiting to be euthanasized?

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What say ye?

(I want names and stock symbols!)

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Paul A. Volcker Address on Future Challenges

And now, a word from a distinguished central banker:

Monetary Policy Transmission:  Past and Future Challenges
Distinguished Address by Paul A. Volcker
To Conference on Financial Innovation and Monetary Transmission
Sponsored by the Federal Reserve Bank of New York, April 2002

The subject of this conference — innovation and monetary policy transmission — is something that has naturally concerned me over the years. Historically, the issue has appeared in somewhat different guises. I never thought I had really adequate answers, but somehow the system has worked. Moreover, I am afraid that as far as current technological and financial innovations go, I should be listening rather than speaking. I am not a big user of new technologies. My main experience with technology as president of this Bank and then as chairman of the Federal Reserve Board was asking why staff needed new computers every four years. I always had the feeling that capacity was expanding exponentially over time, but I did not know that monetary policy was becoming any better.

Nonetheless, I believe you are onto an intriguing subject. Indeed, some of the topics covered in your papers remind me of questions I have thought about before. For example, when I was here and when I was in Washington in the late 1970s and early 1980s, we embarked on some new approaches to monetary policy that depended upon control of money by the means of quantitative control of the reserve base.

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