Bondholders of Bears Stearns have likely dodge a bullet, thanks to the Fed and JPM. We are hearing that Bear is the latest victim of the credit crisis. My ass it is. Wall Street firms knew many of their MBS securities were crap. They thought their quant models offered away to package garbage debt into stink-proof packages.
Lenders are also guilty. They gave mortgages to whomever could fog a mirror. They believed that they could securitize them and move them off the balance sheets by selling them to some poor sap who readily believed that AAA-rated securities could yield 6.00% in a 4.50% envirnoment.
It is the banks' fault that the Fed must ease in the face of inflation. It is their fault that the economy is tanking into the worst dislocation since the 1930s. This is a damn mess and it will take YEARS to sort out.
I do feel sorry for borrowers who were lied to. For buyers of investment property, those who did not do the math, investment banks and Wall Street firms, I say let them burn.
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