Bear Stearns Bursting
The bubble bursting today is Bear Stearns.
One of the largest financial institutions in our country, Bear Stearns made pocketfuls of cash leveraging up with derivatives and financial alchemy based on mortgage-backed securities. Well, while leverage is great when the market is going with you leverage eats you alive when the market turns.
Case in point today as the news is breaking regarding the dire situation for this company to survive.
This news, to me, indicates that we are moving into the second phase (of 3) of the whole subprime debacle & credit crisis. This second phase will be when major financial institutions go under. Bear Stearns appears headed that way, so does Countrywide, and a few other names will likely follow in the next couple of months.
The end of this mess is still a LONG way off, in my opinion. That opinion however is based on front-line knowledge with what built the mess. Unfortunately, every one of us is in the path of this storm and we have little in way of evacuation routes to afford us some safety.
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