Fed's rescue of Bear halted derivatives Chernobyl »
Posted By engineer 6 months, 2 weeks ago in Business & FinanceBear Stearns had total positions of $13.4 trillion. This is greater than the US national income, or equal to a quarter of world GDP -- at least in "notional" terms.
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engineer
Hi My background is Biomedical engineering with an MBA As you know from all my comments where I almost stand politically. I have loads of ...
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engineer6 months, 2 weeks ago
We may never know for sure whether the Federal Reserve's rescue of Bear Stearns averted a seizure of the $516 trillion derivatives system, the ultimate Chernobyl for global finance.
"If the Fed had not stepped in, we would have had pandemonium," said James Melcher, president of the New York hedge fund Balestra Capital.
"There was the risk of a total meltdown at the beginning of last week. I don't think most people have any idea how bad this chain could have been, and I am still not sure the Fed can maintain the solvency of the US banking system."
All through early March the frontline players had watched in horror as Bear Stearns came under assault and then shrivelled into nothing as its $17 billion reserve cushion vanished.
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Dicax_Maximus6 months, 2 weeks ago
What the hell, it's only money.....
OK, so it's "creative accounting" at it's basest.....
Why do I smell weeks old dead fish & see a domino teetering on the brink of toppling....
Who needs WMD's when people can gamble with this kind of money, WITH NO CHECKS IN PLACE ????
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1-2-Oscar6 months, 2 weeks ago
The "derivatives system" is nothing more or less than a means of churning grouped investments so that they can provide collateral to multiple dealers. Much of the paper held represents little or no actual "value," but it still serves as the basis for trading in "investments."
It's one big shell game, folks. The operators take money from the public to invest, and use it to "buy" unsupported debt. Because they can show profits on paper, they feel entitled to extravagant salaries and multi-million dollar bonuses. (The head of Bear Sterns "earned" $72 million last year). Then when these "derivative" investments go sour, as they inevitably must, th public loses its money, and the public is also called upon to bail out the investment managers.
What a racket! And it's all LEGAL. Thanks, Mr. Reagan, Mr. Bush, Mr. Clinton, and Mr. Bush, I hope these guys made lots of campaign contributions.
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1-2-Oscar6 months, 2 weeks ago
It is not necessary for you to say something stupid EVERY TIME you post.
The implication that I might be worried about Mr. Bush is insulting. The "factual" misrepresentation of your post is absurd. It may well be that you are simply a fool, but you do not have to bring your misfortune to our attention so frequently.
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Gransater6 months, 2 weeks ago
Another fine example of how the US is very much a socialistic state that favors big money, rather than the working stiff. We'll bail out anyone in doodoo that may lose their money, if they have more of it than they know what to do with.
This in addition to allready being helped by the removal of oversight and rules, put in place by goverment years ago for a very good reason. Guess those lessons are eighter forgoten, or are being ignored for the expediency of greedy inventive people without morals or scrupples.
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