plus2sd

Taking the Human Mind Two Standard Deviations Above the Norm.

Gregory Berns, Ph.D., M.D. is a professor of psychiatry and behavioral sciences in the Emory University School of Medicine in Atlanta, Georgia. See full bio

March 17, 2008,

Comments on "Bear Stearns and the Biology of Hope: Part I"

Bear Stearns and the Biology of Hope: Part I

By Gregory S. Berns on March 17, 2008 in plus2sd

Hope, not the Fed, is the engine of the economy. Unfortunately, the Fed's move doesn't go nearly far enough in restoring hope that the economy will improve in the near future. It smacks of desperation more than anything else.

Value of Bear

Submitted by foreclosurefish on March 17, 2008 - 9:09am.

You're right on the subjective value of Bear Stearns. It isn't what JPMorgan says it is, or what the Fed might believe it is. Bear collapsed because investors stopped believing that it would be a good investment in the future (even a few days into the future), and took their money out of it.

The fact that the firm went from a high of $172 per share, to $30 on Friday, to $2.00 that JPMorgan is paying for it, shows how little value it is now believed to hold.

The Fed lowering interest rates or pumping more dollars into the system only distorts these subjective values, and the fallout is failures like Bear.