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Meltdown By Bear Stearns Respond To The 2007/2008 Financial Crisis

567 Words3 Pages

Financial Crisis 2008
The historical narrative, “Inside the Meltdown” by the Public Broadcasting Service (PBS, 2017), is a narration of the events that led to the rapid collapse of the company, Bear Stearns. Bear Stearns is considered one of the largest securities trading and investment bank of all times. According to the narrative, among the reasons that led to the collapse of the company were its inability to raise private capital to enable the management of its daily operations. As a result, it incurred massive debts that precipitated its bankruptcy. However, the federal reserve for fear that collapse of the investment bank would spark a chain of institutional bankruptcies partnered with JP Morgan Chase to avail a 29.5 billion dollar loan to bailout Bear Stearns. According to the narrator, the downfall of Bear Stearns marked the beginning of a financial crisis that would shale the world and cause a global recession. …show more content…

Ideally, the narrator provides a compelling narrative of how the company’s position started to dwindle up to the time of its collapse. He explains, through various first-person narratives, the role and impact of rumor mills, as well as the role of the media in influencing the reaction of investors as far as investing in the company is concerned. As a result of a vote of no confidence and people withdrawing their stocks from the company, the company’s stock value started to fall. Of crucial importance is Bear Stearns chronology of failure and the attempt by the government to try and rescue the

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The stock market that had for long been viewed as a path to wealth and richness was now a sure path to bankruptcy. The stock market was not the only one that was affected; actually, that was just but the beginning of the Great Depression. In effect, it was unfavorable for the clients whose money was already in the markets for investment: many banks had done that and that meant a huge loss to the clients. It was also a double loss in that though the clients lost their money, the banks were forced to close down. This is because the banks at the time depended completely on the stock market.

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What would have been different if Bear Stearns was allowed to fail? Who did it help to have the government step in and help out Bear Stearns and should have Bear Stearns been allowed to fail? These questions are quite controversial because there are arguments for helping Bear Stearns and also the side that is against the “bail out”. The people that would have been most affected if Bear Stearns were allowed to go bankrupt would have to be the people that had retirement funds that were held there and then other huge hedge funds. They were a clearing firm and dealt as the middleman between companies.

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