"But, first, stop the rot"

The title is the last sentence of the lead commentary in this week's issue of "The Economist". After reading much of the weekend press efforts to place blame, create anxiety, and pretend that hindsight is insight, it was a welcome sane suggestion in this financial crisis. We are in the midst of a problem that will take some time and, as "The Economist" is implying, we can't come up with the remedy to heal the victim unless we stop the bleeding first. One thing at a time. There are still a lot of good things going on in the economy, with corporate America, and with global economic growth, just not at the pace, in general, of 18 months ago. Financial firms need to get through the c's of confidence, credit and counterparties and speculators need to get discouraged. That's cleaning up the wound. Then we can again see that the patient is not near death and choose the best medicine(hopefully not too much).

One interesting bit of news, or subject of rumors, is that the price of Bear Stearns stock is not trading well above the JPM deal price because of the expectation that a better deal can actually be struck, despite the comments of that offshore Brit billionaire who willingly and knowingly invested in the declining Bear stock in the hopes of making a killing. Some say that Bear bondholders are buying the stock now so they can vote for the deal because any loss that they take on the stock is immaterial compared to what they would lose in a protracted restructuring or default. Possible, although who knows. Something's going on.