What's Bear Worth? Nothing.

Felix Salmon is pointing out on his Portfolio blog that Bear Stearns is still trading at more than twice the price JP Morgan (or rather the American government) is paying for it. And it's true. It's quoted at $4.81 this morning, compared to the $2 it is being sold for. Clearly, some people in the market think the JP Morgan deal won't go through. They are betting the bank can be revived. Now, it may well be true that Bear is worth a lot more than $2 and JP Morgan is getting the steal of the century. But investors such as RAB Capital thought the same about Northern Rock in Britain, and they ended up losing a packet. Once a bank has to be rescued by the government, there is no point in betting against the deal.