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What happened in Bear Sterns is repeating across the spectrum of banking and financial sector
Karen Zuba
Jun. 30, 2007
Financial services companies, investment banks, and brokerages are in deep trouble with bleeding hedge funds, uncontrolled leveraged buying spree of private equity funds, and the mortgage defaults across the country.
Bear Stearns Cos., battered by the near-collapse of two hedge funds that forced the firm to put up $1.6 billion for a bailout, ousted the head of its asset- management division. This is just the tip of the iceberg. The reason behind total collapse of corn futures are a few hedge funds that went belly up but are quiet about it for now.
The financial meltdown has started quietly in 2001. The easy money and tax cuts floated the financial leverage system for six years. Now the reality has come to hit the main street. The mortgage defaults, the real estate foreclosures, and leveraged M&A bubble will collapse on the system.
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