money.cnn.com — Today CNBC and other news outlets reported that Treasury Secretary Hank Paulson confirmed what we have suspected. Since this loan was backed by Bear Stearns' worst collateral, worthless assets consisting of subprime mortages, YOUR TAX DOLLARS, $100 PER CITIZEN, WILL BE USED TO BAIL OUT RECKLESS INVESTMENT BANK BEAR STEARNS.
Apr 1, 2008 View in Crawl 4
ralphthemagiApr 2, 2008
Credit and capital markets are at the very foundation of capitalism. Have fun paying cash for your house.
Closed AccountApr 3, 2008
The violent, yet uninformed, reactions that constantly appear on digg are truly disturbing. This article, however, takes the cake. I'm not an economist myself, but as a graduate student at MIT, I've had the fortune to learn from some of the world's best. I recently participated in a seminar on the subprime mortgage crisis, and nearly every one of my colleagues agreed that the Fed made the right move. Bear Stearns was especially interconnected with other banks, and if they went down it would have been a disaster for the entire banking sector. If the banking sector goes down, loans dry up. If loans dry up, housing demand and housing prices drop; business investments fall. In turn, production goes down and employment and income will fall. If income falls, so does demand, and so production falls even more. It's a negative, self-reinforcing loop. Many economists have blamed the Fed for failing to prop up the financial sector leading up to the great depression. To me, it looks like they're smarter this time. Bear has had to pay dearly and, believe me, the Fed wants it that way. They have no desire to create moral hazard by having this look like a bail out. That is, they don't want other banks to start thinking they can also be irresponsible and get saved if they screw up. That helps no one. JP Morgan will most likely pick up Bear at $10/share. That's a FRACTION of the $160 we saw a year ago. Billions of dollars of wealth has been destroyed. The Fed is trying to save YOU, not Bear Stearns. Do your homework before you write your congressperson or protest a move that may have saved us from the Great Depression of 2008.
dude59Apr 3, 2008
This stuff is in violation of the constitution of the United States. I say we hang them all for TREASON!
yellowsnowconeApr 3, 2008
I think you may be wrong here. The collateral isn't worthless, as is in worth nothing. The collateral is made up of mortgages, which are backed by homes. It's just that the value of these mortgages likely exceed the value of the homes, which is why there is no liquidity in the market for securitized mortgages. The Fed here is attempting to provide some liquidity by providing these loans.As to whether the loans will be paid back, time will only tell. As I said, there is collateral. It's likely that they will be paid back. If there is something to object to here, it's that these Fed loans were made on very generous terms. But this is not a freebie. We can't say that about the Fed's actions.
drenigmaApr 4, 2008
If you go to Realscoop.com, you can see how the website catches the CEO of Bear Stearns lying about how well Stearns' fiscal health is recorded the DAY BEFORE the bottom fell out. If this had only been there when he was actually interviewed...
drenigmaApr 4, 2008
The website, RealScoop.com, shows the CEO of Bear Stearns lying about the company's good standing the day BEFORE the actual fall from grace.