UPDATED 3/17 AT 8am

The AP Reports that global markets are tumbling today on the news that Bear Stearns is being bailed out by JP Morgan Chase:

Global markets plunged Monday on news that JPMorgan Chase, backed by the U.S. government, had to rescue troubled Bear Stearns, with investors struggling to gauge how much worse financial markets could get.

"Its difficult to call where the bottom is," said Richard Hunter, a broker at Hargreaves Lansdown in London.

The New York Times is reporting that Bear Stearns has agreed to be bought out by JPMorgan Chase:

Bear Stearns, pushed to the brink of bankruptcy by what amounted to a run on the bank, agreed late Sunday to sell itself to JPMorgan Chase for a mere $2 a share, narrowly averting a collapse that threatened to cascade through the financial system.

The price represents a startling 93 percent discount to Bear Stearns' closing stock price on Friday on the New York Stock Exchange.

The share price represents a huge fall from what Bear Stearns stock fetched on year ago:

Reflecting Bear Stearns's dire straits, JPMorgan agreed to pay just $236 million for the firm, a figure that includes the price of Bear's soaring headquarters on Madison Avenue in Manhattan. At $2 a share, JPMorgan is buying Bear Stearns for a third of the price at which the troubled firm went public in 1985. Only a year ago, Bear's shares fetched $170. The cut-rate price reflects deep misgivings about the firm's prospects.

Alan Greenspan writes in the Financial Times that this current financial crisis is likely the worst since WWII:

The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.

Home price stabilisation will restore much-needed clarity to the marketplace because losses will be realised rather than prospective. The major source of contagion will be removed. Financial institutions will then recapitalise or go out of business. Trust in the solvency of remaining counterparties will be gradually restored and issuance of loans and securities will slowly return to normal. Although inventories of vacant single-family homes - those belonging to builders and investors - have recently peaked, until liquidation of these inventories proceeds in earnest, the level at which home prices will stabilise remains problematic.

Wall Street is waiting for what might come next:

A big Bear Stearns-shaped cloud will be hanging over Wall Street this week.

As investment banks including Goldman Sachs, Lehman Brothers and Morgan Stanley kick off the first quarter reporting season, investors' already-frayed nerves have been strained to breaking point by the crisis surrounding Bear.

Bankers say last week's near-collapse of one of the most feared and influential US brokerage firms could not have come at a worse time for a sector battered by bad news and huge losses.

"Banks were going to report bad results anyway, but the Bear situation will put further pressure on share prices and management," says a senior Wall Street banker.

The Fed took more steps Sunday to ease the crisis:

Federal Reserve Chairman Ben Bernanke said new steps announced by the central bank Sunday should help squeezed financial institutions get cash infusions_ a fresh effort to provide relief to a spreading credit crisis that threatens to plunge the economy into recession.

The central bank approved a cut in its lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created another lending facility for big investment banks to secure short-term loans.

"These steps will provide financial institutions with greater assurance of access to funds," Bernanke told reporters in a brief conference call Sunday evening.

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