Bear Stearns…what does that mean to me in Riverside?

(Riverside, California)…SO…with one of the leading investment banks getting taken out behind the woodshed this weekend and being put to a quick death, the news media (there I go, picking on the media again) would have us all thinking that the financial boogie man is definitely here and that there is no reason to even get out of bed tomorrow.  I mean really, woe-is-me, and who could blame us for simply pulling the covers up over our head and getting a few extra Z’s while the world tumbles.  BUT…for those of us who take a bit more active role in our lives, and who would like to know just what this whole Bear Stearns mess means to us as buyers and sellers of real estate here in good old Riverside, California, then please read on.

First of all, while there is great empathy for anyone who is adversely affected by any financial misfortune, please understand that in the jungle oriented world of high finance, BEAR STEARNS GOT WHAT THEY HAD COMING BECAUSE THEY GOT GREEDY.  Of course, by greedy, we mean the higher-ups that made all the bonehead decisions that got them in such a mess…because make no mistake, greed is at the central core of how they bit-the-big one.  Naturally, as is usually the case, the little people who work for them will be hugely adversly affected, but it is the decision makers that played loose and fast thatsed the problem.  How did they do this?

Bear Stearns plummet from grace came about pretty much because they bought so many mortgages (which, as we all know by now, were funny-money loans themselves) that when the Vigoro hit the mixmaster, they were so heavy in bad loans, they left themselves no room to move.  There is such a thing a balance in your portfolio, and this is exactly what happens when your balance is out of whack.  Think about playing teeter-totter with you on one end, and a 500 pound gorilla on the other.  Not a pretty picture…for you or the bank.  In the end, when people began to panic at the thought that they may lose their money with Bear Stearns, they all wanted it back, a “run” on the bank ensued, and voila, Bear Stearns had lots of investments ( some good, some horrible) but no cash, and the rest is history. 

But that is not the point of his blog.  The point today is…HOW WILL THIS AFFECT US IN REAL ESTATE IN RIVERSIDE.  And the answer is….it depends on which news report you listen too, and whether you wish your glass to be half full, or half empty…because you control what happens next.

If you want to join in the immediate panic, run in circles, assume that wall street is on the brink of collapse (it is not…it did just fine today), and generally give into the malise that the network news would have you believe, then fine…but you get what you deserve too…because the bottom line is that nothing happened here but a long time company getting overextended due to some really bad thinking on behalf of their now defunct leadership. 

For those of us who choose to look at the big picture, life will go on, J.P. Morgan Chase gets the benefit of Bear Stearns stupidity, and you and I will see no change in our lives.  Remember, as I have said many times before on these pages, some people will make money in this market, and some people will not.  I do not wish to sound unsympathetic to the plight of many, because nothing could be further from the truth.  However, once you get past the human element, what I am saying is true.  Just as we have preached that 5 years from now, everyone will wish they had purchased as many homes as they possibly could, so will J.P. Morgan Chase feel the same way.  They did not create this market, they simply were able to make a sound investment (some analysts say the purchase of Bear Stearns will be the steal of the century) at the right time…AND SO CAN YOU.

SO…how will we be affected by the Wall Street “stuff?”  It’s up to you…but the smart money understands the deal that J.P.Morgan Chase made is no different than the buys you can now make on bank owned properties…and while the financial media may not tout your purchases as the “deals of the century”, you can rest assured that 5 years from now, you and J.P. Mogan Chase will have something in common…you will both be glad at the acquistions you made in the turbulent times of 2008.