JPMorgan to buy crisis-hit US bank

Interesting...

US banking giant JPMorgan Chase has agreed to buy crisis-hit investment bank Bear Stearns for a bargain-basement price.

But the deal announced late on Sunday in the US has failed to sooth worries among Asian investors over the strength of the US economy and the continuing fallout from the global credit crunch.

Hours after the deal was announced in the US, Tokyo's benchmark Nikkei index plunged more than 4 per cent in Monday morning's trade.

Shares in Hong Kong also dropped by more than 5 per cent.

Via Al Jazeera. For an idea of how big this could be, consider this:

JPMorgan is buying the troubled bank for just $2 with the US Federal Reserve, which has already approved the deal, providing special funding.

Before it faced speculation about liquidity problems, triggering a run on the bank last week, Bear Stearns stock had been trading at around $70 a share, plunging to $30 on Friday.

From $70 to $2 a share in a week? Crazy. Needless to say, the forums at itulip.com are abuzz about this.

Here's another weird thing I've noticed. As most of you know, I'm a bit of a science geek, and as a result I've picked up some information on the composition of our coins. See, Canadian quarters and dimes made before 2000 are made of (virtually) pure nickel, while those made after 2000 are nickel-plated steel. I've tended to accumulate the old ones, in case I want to do a chemistry experiment with them sometime. Well, I ended up using my last ones in the dryer this past Friday, and since then I haven't received a single one in change. Not one. I have received a larger than normal number of American ones, interestingly.

Of course, the reason for this is that the old quarters contain more than 25 cents worth of metallic nickel, but until very recently there were still plenty of the old ones in circulation. Could it be that the mint is quietly taking the old ones out of circulation, and if so, why? Are they actually concerned that large numbers of them will be melted down for their scrap value?

Incidentally, bugsybrown has some more commentary on this story, including a nice summary explanation of what a bank run is.