Whew, that was a close one! Ugly for a few days I guess, but it could have been much worse! No, I refer not to Paris Hilton upon her initial release from the LA County pokey after serving three days of hard 
time, but to the Bear Stearns/subprime crisis. Shame on you Mr. Stearns, or whoever you were, for scaring us investors like that & moving the Blackstone IPO to the second page of the WSJ. We should have had a week of revelry & celebration of levered risk taking. Instead you forced us to remember Long Term Capital Management & acknowledge once again (although infrequently) that genius, when combined with borrowed money, can fail. But (as the Street would have you believe), this was just a close one. Sure Bear itself had to come up with a $3 billion bailout, but folks, most of these assets are worth 100 cents on the dollar. At least that’s how they have ‘em marked! Didn’t wanna sell any so that someone would think otherwise… no need to yell “fire” in a crowded theatre ‘ya know. After all, hasn’t Ben Bernanke repeated in endless drones that financial derivatives are a healthy influence on the financial markets & the economy? And aren’t these assets well…financial derivatives? Besides, I direct you to the investment grade, nay, in many cases AAA ratings of these RMBS (Residential Mortgage- Backed Securities) & CDOs (Collateralised Debt Obligations) & defy you to tell me that these architects were not prudent men. (Sorry ladies, they are still mostly men!)
For Complete IIPM Article, Click here
Source: IIPM Editorial, 2008
An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
time, but to the Bear Stearns/subprime crisis. Shame on you Mr. Stearns, or whoever you were, for scaring us investors like that & moving the Blackstone IPO to the second page of the WSJ. We should have had a week of revelry & celebration of levered risk taking. Instead you forced us to remember Long Term Capital Management & acknowledge once again (although infrequently) that genius, when combined with borrowed money, can fail. But (as the Street would have you believe), this was just a close one. Sure Bear itself had to come up with a $3 billion bailout, but folks, most of these assets are worth 100 cents on the dollar. At least that’s how they have ‘em marked! Didn’t wanna sell any so that someone would think otherwise… no need to yell “fire” in a crowded theatre ‘ya know. After all, hasn’t Ben Bernanke repeated in endless drones that financial derivatives are a healthy influence on the financial markets & the economy? And aren’t these assets well…financial derivatives? Besides, I direct you to the investment grade, nay, in many cases AAA ratings of these RMBS (Residential Mortgage- Backed Securities) & CDOs (Collateralised Debt Obligations) & defy you to tell me that these architects were not prudent men. (Sorry ladies, they are still mostly men!)For Complete IIPM Article, Click here
Source: IIPM Editorial, 2008
An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
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