JP Morgan Chase + Bear Stearns

A great old firm got bought out today for peanuts. I was a partner before and after the Reagan administration. A sub-prime credit casualty.

Paulson and Bernanke have done exactly the right thing. It was a run on the bank. The Fed stopped it right there. No banking crisis.

The big Wall Street banks are in good shape, even with earnings losses they're still well capitalized, profitable and solvent. Fed stopped it from spreading on Friday; JPMorgan takes them over tomorrow.

The Fed cut the discount rate today by a quarter point. It will reduce target the fed-funds rate on Tuesday. The banking system will function fine. That's the key.

Paulson was good on the talkies today, emphasizing confidence in the banking system. He's a capable guy who is working the phones and is in touch with everyone This is how to stop a crisis. Bush was right to put on an optimistic face on Friday in my interview and later in his speech to the N.Y. Economics Club.

Senator Schumer is calling Bush "Herbert Hoover." But Hoover signed protectionist Smoot-Hawley, just as Hillary and Obama are today trying to break up NAFTA. Hoover signed a huge tax increase, just as Hill-Bama are preaching. The Dems are emulating Hoover. Bush is trying to stop it.

But the administration should be pushing for a strong dollar. That would help.