Tuesday, Mar 18, 2008
A third of the shares of Bear were owned by Bear employees
Market Oracle: The Real Bear Stearns Story and the Risks of Systemic Collapse
This is not a bailout. The shareholders at Bear have been essentially wiped out. Note that a third of the shares of Bear were owned by Bear employees. Many of them have seen a lifetime of work and savings wiped out, and their jobs may be at risk, even if they had no connection with the actual events which caused the crisis at Bear. Don't tell them there was no moral hazard.
Posted by sold 2 rent 1 @ 11:33 AM (986 views) Add Comment
9 Comments
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1. japanese uncle said...
Smells as bad as Enron.
2. plato said...
Excellent !!!
3. Big_jay said...
The smart money got out at $170 a share.
4. Landedgentry said...
Shame, Now who'll pay for the cocaine and hookers?
5. happyrenterz said...
"The risks of a systemic collapse have risen to uncomfortable levels. The complete withdrawal of credit from the financial system has led to a series of implosions of hedge funds and other leveraged investment vehicles. At some point - and nobody knows when that point is - the system is not going to be able to withstand further failures. It will not be the sheer volume of failures that brings the system to a standstill; the system is enormous and can sustain huge dollar losses before becoming impaired. The problem is that the global financial system is a case study in chaos theory. This is truly a case where a butterfly flapping its wings in West Africa could lead to a Category Five hurricane thousands of miles away. There are an incalculable number of derivative contracts and counterparty relationships on which the stability of the financial system hinges. All it would take is the collapse of the wrong firm or the wrong derivative contract at the wrong time to throw the wrong financial institution into crisis and force the entire system into a death spiral."
6. Landedgentry said...
Outside Bear's HQ:
JUMP JUMP!
LOL
7. cornishman said...
happyrenterz - nice quote.
I liked:
"and the greatest failure that investors, lenders and regulators seem to suffer from in perpetuity is a failure of imagination. They remain incapable of imagining that the worst can happen"
8. happyrenterz said...
Jim Cramer is the new Michael Fish.
Last week:
"No! No! No! Bear Stearns is fine. Do not take your money out…Bear Stearns is not in trouble. I mean, if anything, it’s more likely to be taken over. Don’t move your money from Bear. That’s just being silly. Don’t be silly."
http://ftalphaville.ft.com/blog/2008/03/18/11667/bearish-blogging/
9. Bye_to_let said...
Interestingly the Mad Money website says Jim Cramer was right!! This is what they say now...
The Mad Money host pointed out how “stupid, reckless and wrong” it would have been if he’d told people to pull their money out of Bear Stearns, or any other bank for that matter. It could have caused a run on Bear, he said, despite the Fed’s willingness to intervene
So good work Jim on that one yeah?!