Bear Stearns and Credit Markets

A slow day on the markets turned nasty today, and it ended worse. The market fell off a cliff into the close, losing almost 300 points, with Bear Stearns doing the need on a conference call where executives said the deteriorating mortgage markets had taken us into the worst fixed income market in 22 years.

Here is the quote from Bear CFO Sam Molinaro late today:

These times are pretty significant in the fixed income market. It’s as been as bad as I’ve seen it in 22 years. The fixed income market environment we’ve seen in the last eight weeks has been pretty extreme. So, yes, we would make that comparison to market events [like the late-90s debt collapse].

As damage control (the company was responding to concerns raised in an S&P credit report earlier in the day) goes, this was horrific and ham-handed, like trying to put out a fire via an air drop of a few thousand gallons of gasoline. You don’t say that sort of thing, even if you believe it’s true. Not now. Maybe later.

Anyway, the preceding words set in a motion a chain of other commentary, including impassioned stuff about credit markets in general on CNBC from Jim Cramer during Street Signs with Erin Burnett where he called for an immediate Fed rate cut, hang the consequences.

Remarkable. Emotions are running high today, and we are going to have to wait to Monday to see just how how the markets respond. More tonight during my 4pm PST spot on CNBC.

Related posts:

  1. Cyclicality in Commodities Markets
  2. Cross-National Comparison of Mortgage Markets
  3. The Bear Case for Disrupting RIM
  4. Bill Gross on Credit Markets & Rate Risks
  5. Marc Faber on Markets

Comments

  1. dd says:

    Why on earth would Cramer want the fed to open the spigot. That’s what got us into this problem in the first place. We’ve had fun for the last decade. It’s time for us all to deal with a little payback for a while to right the ship.

  2. One Way Stox says:

    It’s been 3yrs. since The Fed has cut rates.
    There was only one cut in 2004, only one cut in 2003.
    Cramer is correct for calling for a rate cut. Who wants to go through 1998 again?

  3. hedgerow says:

    You can take your medicine now or later OWS.

  4. Andi says:

    Panic! Run! Sell! Oh wait, never mind…

  5. franklin stubbs says:

    “You don’t say that sort of thing, even if you believe it’s true.”
    Eh, not too put too fine a point on it but, isn’t bullshit pretty much what got us here in the first place?

  6. dave says:

    Regardless of conditions panic never helps, that was an awful comment. But it has come to be expected from Bear. They need an outside crisis management team. Current execs have fumbled repeatedly, the brand is severely damaged.
    Cramer was a disaster, hard to believe he ever handled real money. His spin was pathetic. A Fed cut now would do nothing for homeowners. It would bail out a fair number of Hedge Funds that have hedges not performing according to model. The Fed ain’t moving this week, nor should they.

  7. yayaya says:

    Someone remind me again why it’s the Feds job to bail investors who took high risk bets?