it's a bear (stearns) market

The Fed and the de facto Bush Administration's Treasury Department found themselves faced with an investment bank about to go belly-up because of its over-dependence on securities based on subprime mortgages. The market had been lending them money, but decided that Bear Stearns' no longer looked like a good risk. So what did it do to punish Bear Stearns for failure to invest prudently?

They're bailing out Bear Stearns (what BS).

It doesn't surprise me. After all, the Secretary of the Treasury, Hank Paulson, is an old Wall Street guy. Wall Street remains a bastion of support for the Republican Party's pro-business wing. So the corporate welfare is to be expected.

Too bad. As I wrote before, I agree with Steve Pearlstein: that the best thing that could happen to our economy is for a dozen high-profile hedge funds to collapse; for investment banking to enter a long, deep freeze; for a major bank to fail; and for the price of a typical Park Avenue duplex to fall by 30 percent. For only then might we finally stop genuflecting before the altar of unregulated financial markets and insist that Wall Street serve the interest of Main Street, rather than the other way around.

Because you know some small business on Main Street, faced with cash flow problems and lenders that refuse to help it out any more, wouldn't get a dime. And Bear Stearns was a relatively small (by major Wall Street standards) investment bank. A good one to let fail.

Oh, and I guess this means we are officially in a recession, or at least despite the denials from the Bushies, in a bad economic situation. Because that was the special circumstance that they claimed was the reason for the bailout.