Taking Stock of Bonds

March 14, 2008

The Same Old Song

Like a lyric or beat that has been recylced in many a pop song, this week's events seem like a song we have all heard before.

The politician who blows it all for risky dalliances, rising oil prices, inflation worries and gold climbing higher on, among other things, political tensions.

Let's not forget about all the talk of ruin from financial speculation. Friday morning's bailout of Bear by the Fed and JPMorgan, too, has an eerily familiar ring.

We turn, as we have previously, to Prof. Charles Geisst's "Wall Street: A History from its beginings to the Fall of Enron." In 1907, Geisst reminds us, the failure of Knickerbocker Trust Co. prompted the Wall Street community, led by J.P. Morgan, to put together a rescue package to prop up other institutions.

Later, Morgan would help support Trust Co. of America. When the NYSE had trouble and its president asked the renowned banker to lend it $25 million, Morgan offered up the money.
 
"After bailing out both banking system and the NYSE, Morgan was deified in the press, being referred to as 'our savior.' He was portrayed as having saved the country from the excesses of speculation and watered stock," Geisst writes.