This is straight from science fiction.

The Masters of the Universe, Bear, Stearns, fifth largest investment bank in the United States, whose stock price once soared well above $100, is out of business. Last March 12, its stock was worth $63.50; by March 14, it had fallen by half, to $30. And yesterday March 16, it was announced that their arch-rival and competitor, J.P. Morgan-Chase, bought all Bear, Stearns shares for… $2 per share. Some $20 b. in paper wealth went up in smoke. Investors pulled their money out of Bear, Stearns so fast the Fed did not have enough time to reliquify the bank. Bankruptcy happened at the speed of light.
Innovation is to blame.

Creative financial engineers found unique innovative ways to combine bad mortgages (the euphemism is “sub-prime,” but that means bad) with good ones, mixing them in complex ways that disguised the high risk involved, and revealed only the relatively high return (rate of interest). Most of the banks and investors who bought these so-called “collateralized debt obligations” (packages of mortgages that became collateral for bond issues) neither fully understood them, nor understood the risks involved. As often happens, when investors fail to adequately measure, manage and understand risk, the risk chickens come home to roost. People failed to pay, as interest rates rose, and the house of cards built on this financial innovation collapsed.

Alan Greenspan says we are now having the worst financial crisis since WWII – basically, since 1929. At that time, people yanked their money from banks and banks went bankrupt. It is now happening again. And, alas, financial innovation is to blame.

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