Is the Great Depression back?
I think things are bad, but not as bad as an analogy to the Great Depression would imply. Contrary to some popular belief, the Great Depression was not caused by the market crash of 1929; rather, most economists agree that bank runs were far more destructive and the market simply followed the chaos in financial markets. I believe that what happened to Bear Stearns was certainly an ominous sign. It was indeed a massive bank run, as those who held securities/derivatives/contrac ts with Bear began to doubt Bear’s ability to make good on its obligations. Bear, however, is known as a clearing house for hedge funds and whatnot. They will underwrite practically any contract that a fund manager can dream up. And they dream up some pretty wild things. I’m not affiliated with any of these firms, but there are other investment houses that have been far more prudent and will likely survive. JP Morgan will remain solvent, as will Goldman. Lehman takes risks but made some smart moves before the s*$^
