JP Morgan sweetens the deal

I am of two minds at the news that JP Morgan has raised its bid for Bear Stearns from $2 a share to $10 a share.

On the one hand, it will help the deal go through, putting JP Morgan's balance sheet behind all of Bear's trade, which should go a long way to settle the markets. And the Fed leaned pretty heavily on Bear Stearns management to make a sweetheart deal to entice JPM in; that's not exactly fair.

On the other hand, failure should hurt; otherwise, the moral hazard problem is too great. And raising the price from $2 to $10 inches the needle a lot closer to "bailout".