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Bear Stearns was deeply affected by the subprime mortgage crisis. The subprime mortgage crisis is a result of the sharp rise in mortgage delinquencies and foreclosures.

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In the stock exchange what animal is used as a nickname to describe someone who sells shares thinking that the price will fall?

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Why did the American government bail out Bear Stearns?

The public justification is that the fall of a large company like Bear Stearns could cause a ripple effect that would take down other companies, perhaps the entire American economy. Many Americans are skeptical of this reasoning, suspecting that perhaps bribery of various members of Congress and their staffs is the more likely motivation for such massive assistance. In truth, no one knows what would happen if a firm as large as Bear Stearns collapsed. The only way to truly know would be to let it happen, and since there is the strong possibility of a "ripple effect," it would seem prudent to avoid an experiment of that nature.


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