The BearStearn Bears Further the Market Crisis

by Mikasi | March 15, 2008 at 03:56 am

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This was splashed across the morning's financial news -

Stocks were pummeled after a plan to alleviate a liquidity crisis at Bear Stearns sparked concerns about the depth of the problems in the already roiled financial markets.

So it goes that even the most reliable players in the investement world
are taking savage economic hits. Thus, they have to look for bailouts where
they can find them -

Bear's stock price tumbled 47% after the firm turned to J.P. Morgan Chase and the Federal Reserve for a 28-day loan of as-yet undetermined size.

For much of the past year, investors have demonstrated an aversion to
potentially risky assets, shunning stocks, "junk" bonds and mortgage
debt. In the past few weeks, they have even fled seemingly safe
products such as municipal bonds or debt issued by Fannie Mae and Freddie Mac, which are government-sponsored enterprises.

But we already knew or suspected that. So perhaps the most interesting news in this piece is a bit of conjecture - and not necessarily unwarranted conjecture on the part of the author. He wants to know why Bear Stearns didn't look outside of America for funding. And what he suggests is not at all hopeful -

Some traders also took note that Bear turned to J.P. Morgan and the
Fed, rather than another investor such as the deep-pocketed arms of
foreign governments that have been buying stakes in financial companies
in the past year. That might suggest that these sovereign-wealth funds
are tapped out or unwilling to risk more losses from recent forays into
financial shares.