Tony Dye, the only fund manager to talk sense during the first Internet bubble, has died. He withdrew his clients’ money from techbubble shares and put it into real companies and cash. For which service he was duly, er, retired. David Livesey pointed me at a generous obit in the Telegraph.

In March 2000, with the FTSE index at 6,400 and with Dye’s clients estimated to have lost some £8.5 billion in potential bull market gains, P&D finally lost patience. It was announced that Dye had taken “early retirement”. By this time the firm’s funds under management had fallen from £60 billion to less than £35 billion.

But Dye was – albeit belatedly – proved right. Within a month of his departure, and before P&D had had the chance to change its strategy, the stock market turned. Internet and telecom shares plunged, and the firm found itself rocketing from the bottom to the top of the pension fund performance tables.

The irony was that the hundreds of fund managers who had followed the herd and been proved disastrously wrong kept their jobs, while Dye paid the price for his independence of mind. Yet he remained philosophical, taking wry comfort from Keynes’s observation that “worldy wisdom teaches that it is better to fail conventionally than it is to succeed unconventionally”.

Charles Arthur has come up with an inspired analogy for the sub-prime credit syndrome

But here’s the thing: all the reselling and leveraging of debt, in some cases producing up to $60 of “debt” from $1 of assets (and those assets not always too certain – how much is a house worth? Only what you can get someone to pay for it), was a way of feeding back into the system things that were already contaminated.

Which reminds me of the story that I covered in great detail in the late 1990s and early 2000s: BSE. Cows, fed ground-up cows. Any trace of disease (especially a brain-rotting one, which may have been endemic) gets transmitted throughout the (thundering) herd.

BSE turned out to be very, very hard indeed to eradicate – I’m not sure it’s gone away even now. (I’ll check the stats in a bit.) I think that the financial BSE in the system now is going to prove just as hard to get rid of; only when you flush all the crap that the banks have been feeding each other out of the system can you be sure it’s OK. And how long exactly will that take?

Oooh…. there’s something really delicious about the news that JP Morgan Chase is picking up Bear Stearns for a song. As I recall, Bear Stearns was the only major Wall Street bank which refused to participate in the whip-round to rescue the Long Term Capital Management hedge fund in 1998.

In a shocking deal reached on Sunday to save Bear Stearns, JPMorgan Chase agreed to pay a mere $2 a share to buy all of Bear — less than one-tenth the firm’s market price on Friday.

As part of the watershed deal, JPMorgan and the Federal Reserve will guarantee the huge trading obligations of the troubled firm, which was driven to the brink of bankruptcy by what amounted to a run on the bank.

Reflecting Bear’s dire straits, JPMorgan agreed to pay only about $270 million in stock for the firm, which had run up big losses on investments linked to mortgages.

JPMorgan is buying Bear, which has 14,000 employees, for a third the price at which the smaller firm went public in 1985. Only a year ago, Bear’s shares sold for $170. The sale price includes Bear Stearns’s soaring Madison Avenue headquarters.

The agreement ended a day in which bankers and policy makers were racing to complete the takeover agreement before financial markets in Asia opened on Monday, fearing that the financial panic could spread if the 85-year-old investment bank failed to find a buyer…

I know this stuff is serious and I ought to be very grown-up about the fact that all our pensions are tied up in this nonsense, etc. etc., but still…

What’s also interesting is the speed and efficiency with which the ailing bank was rescued: compare that with the fiasco of Northern Rock. In the pre-FSA regime, the bank of England could have organised the same kind of swift, ruthless, effective rescue.

I’ve always been a bit suspicious of the Patrick legend. For example, it is claimed that he banished snakes from Ireland. This is dubious on two counts: first of all, there’s no evidence that there were ever snakes in post-glacial Ireland; secondly, Fianna Fail is still in business — and indeed running the country. The shamrock nonsense comes from the legend that St Pat, seeking some way of explaining the Christian doctrine of the Holy Trinity to my (dense) fellow-countrymen, came up with the wheeze of showing them a three-leaf clover. Seems that they fell for it, big time.