BBC: Bear Stearns gets emergency funds
"The rescue of Bear Stearns demonstrates that the worst of the global credit crunch is not yet behind us," he said.The statement - "...collapse, it could have put the whole financial system at risk" - is the catcher.
He says that if Bear Stearns had been allowed to collapse, it could have put the whole financial system at risk.
Bear Stearns shares dropped as much as 53% to $28 on the news.
"In just the last 24 hours Bear Stearns came close to running out of the cash or liquidity it needs to meet its daily requirements..."
What happens when the financial system collapses?
BBC: Q&A: Bear Stearns banking crisis
The company had invested heavily in sub-prime mortgage instruments and other securities which are now seen as highly risky, and which have fallen sharply in value.
And it had less capital than its rivals, such as Citigroup and Merrill Lynch, who were also heavily exposed, to plug the gap.
2 comments:
Don't you know that corporate welfare is the right of the privaledged.
We are to be grateful that we can contribute taxes and bloated interest rate payments right into the pockets of the wealthy elite. Come on, where's your patriotism?
Sorry about that I forgot the wealthy have right to be treated in such ways with our tax dollars. We wouldn't want them to endure the daily miseries of the lower classes would we? Poor darlings can't handle failure like the rest of us can they? I have an old friend from the Aristocracy and his favorite phrase about poverty is that poor people do it so much better then rich people because they have so much more experience dealing with it. This really is the policy of US Government in a nutshell isn't? Not only do the people at the bottom have to suffer their own personal calamities and poverty but they must also pay for those of the top as well. Or as Demo. Pres. candidate 1972 George McGovern so eloquently once said about the Nixon economic plan ( REAGAN /BV$H) for America. "Socialism for the rich and Capitalism for the Poor."
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