Rescue Me: A Fed Bailout Crosses a Line

WHAT are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in? Will the consequences be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year?

Or all of the above?

Stick around, because we’ll soon find out. And it’s not going to be pretty.

I predict at least a 250-point drop in the market today, and banking/brokerage stocks down at least 5%.

Mid-day revision (update 12:06 am MDT, 6:06 pm GMT): Market finishes flat to slightly down. Brokerages finish down at least 10%.

Market close (update 2:31 pm MDT, 8:31 pm GMT): Dow up 21.2 points (+0.18%), Nasdaq down 35.5 (-1.60%), S&P 500 down 11.54 (-0.90%).

Brokerages/Investment Banks:

  • Bear Stearns (NYSE: BSC) down $25.19 (-83.97%)
  • Morgan Stanley (NYSE: MS) down $3.17 (-8.02%).
  • Merrill Lynch (NYSE: MER) down $2.33 (-5.36%).
  • Goldman Sachs (NYSE: GS) down $5.84 (-3.72%).
  • Lehman Bros. (NYSE: LEH) down $7.51 (-19.13%).
  • JPMorgan Chase (NYSE: JPM) up $3.77 (+10.32%) … amazing what buying a $1-billion building for $236-million can do for your stock price.

Wonder how much money I lost today.