Word: beare
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Several big hedge funds had already been driven out of business by such lender squeezes, starting last summer with two mortgage funds run by Bear Stearns. But Bear itself still turned a small profit in 2007. As late as the first week of March this year, there was no reason to think it was in imminent danger. Then rumors began flying that it was. Lenders refused to lend, clients refused to trade, and suddenly Bear was out of money. It was a bank run, more or less. And the scary thing was that there is no entirely satisfactory explanation...
Bernanke, himself an authority on the Depression, has been pushing ever more creative and aggressive means to avoid this, mostly by lending cash or Treasuries in exchange for mortgage securities. The Fed persuaded JPMorgan Chase to buy Bear Stearns in part by agreeing to lend $30 billion against hard-to-sell mortgage securities on Bear's books...
...general feeling in Washington seems to be that the Bear deal "threads the needle in the right way," as Democratic Senator Charles Schumer put it. But if Fed-arranged fire sales become a regular event, questions will inevitably arise about moral hazard and playing favorites. "They stepped into a vacuum, and I think quite appropriately," former Fed chairman Paul Volcker said on Charlie Rose. "But is this what you want for the long-standing regulatory support system? My answer...
James Cayne Traders like Bear Stearns, led by ex-CEO Cayne, loaded their balance sheets with assets of untested value. When forced to calculate true worth, writedowns followed. Wary firms stopped lending to each other, causing a liquidity crunch...
...care about the environment as much as anyone else. If the environment wasn't looking where it was going and was about to get hit by a car, I'd yell, "Hey, environment, watch out!" I get weepy when I see a poorly rendered CGI polar bear drown. But unlike me, Cassandra was taught to spend more time actually caring than remembering that she is supposed to. We flush the toilet only when absolutely necessary, for instance. Which, in my unenlightened opinion, would mean every time we use it, especially since her being a child of hippies means we have...