“3/17/2008, 11:51am EST”
Wall Street: Idiots at the helm →
Jan 2007: Bear Sterns, fifth largest investment bank in the U.S., is valued at $170 a share.
Friday, 3/14: Bear Stearns closes at $30 a share.
Sunday, 3/16: Bear Stearns is bought for $2 a share.
Money quote: “That is just unbelievable,” said investing consultant Scott Fullman. “It implies there is more risk in here than has been apparent.”
Also see this timeline beginning in June 2007.
Isn’t it amazing that the people who are supposed to understand finance — you know, the people running the banks — didn’t understand that high-risk loans might be… high-risk? Why are these people so surprised, especially given all the warning signs over the past years? A credit-based economy is always a gamble, I suppose, but it is terribly more risky when the regulation of the economy is left to those who don’t believe in regulation. (By the way, I don’t mean to let non-finance workers off the hook — we have enough information to predict such things as well.)
It’s almost hilarious how the anti-regulation talking heads and true believers (i.e. most people in the financial sector, Republicans, and Libertarians) now advocate that the government inject public funds and tinker with interest rates. I’d like to sit back and enjoy the tortured rationalizations of these ideological children… but the bottom line of all of this is much too harmful and tragic.
Meanwhile, the rationalizations will keep on coming: In the era of infotainment, being a complete hack seems to be the key to a pundit’s job security. And the same appears to hold true for the idiotic leaders of the financial services industry.
Never leave home without it.
