On Thu, May 15, 2008 at 1:16 PM, David B. Shemano <[EMAIL PROTECTED]> wrote: > More specifically, I do doubt whether the economy would have collapsed if the > Fed has not bailed out Bear Stearns. The world did not collapse when Drexel > Burnham filed chapter 11. The stability and flexibility of the US debt and > equity markets are not dependent on Ben Bernanke. >
It is important to understand that the financial world has changed since the days of Drexel. Bear, Lehman and others have played the Fed like a fiddle, because they have very deliberately and consciously made themselves too big to fail, and then stripped their own companies of assets by paying themselves fat bonuses. (Drexel, unlike Bear, was not involved in a complex web of credit default swaps that had the potential of causing cascading failures.) I think you are way overestimating the stability of the financial system. -raghu. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
