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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9294)	5/3/2008 2:33:05 AM
From: Hawkmoon	Respond to of 33421

If you even partially bail out Bear Stearns - leveraged at 40 to 1 - next time someone will try 50 to 1. This sums it up pretty well.. Which is why, in exchange for the Fed bailing them out, they get a leash placed upon them in the form of audits and regulations related to risk management. To reiterate a point I've made previously.. Most of can only borrow 50% against our stock holdings because they are considered "securities", which are inherently volatile and therefore, risky. But home buyers were permitted to buy 100% on credit, backed only by the guarantees of a Mortgage insurer. And then the loans were turned into "securities".. (which then become vulnerable to market fluctuations). Hawk