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'Tinker Bell Market' Fallout Wallops Taxpayers

Built on the fairy dust of borrowed money, Wall Street was doomed to fall

By Jim O'Neill,  Newser User

Posted Apr 1, 2008 12:00 PM CDT
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(Newser) – Although he doesn't foresee long-term catastrophe, Allan Sloan of Fortune sounds an alarm in today's Washington Post, saying he's "more nervous about the world financial system now than I've ever been in my 40 years of covering business and markets." He dissects "the collapse of a Tinker Bell financial market, one that depended heavily on borrowed money that has now vanished like pixie dust."

Sloan analyzes the roots of the current situation, explains how it's similar to and different from 1929, predicts the downfall of the American dollar, and suggests that Bear Stearns debt-holders "erect a statue to Bernanke." In the end, "all this money being thrown at the debt markets will stabilize things," Sloan argues. "But the costs will be steep."

Treasury Secretary Henry Paulson takes a reporter's question after announcing the biggest overhaul of financial regulations since the Great Depression.
Treasury Secretary Henry Paulson takes a reporter's question after announcing the biggest overhaul of financial regulations since the Great Depression.   (AP Photo/J. Scott Applewhite)
In this illustration released by Disney Parks, supermodel Gisele Bundchen, left, is portrayed as Wendy Darling, beckoned by dancer Mikhail Baryshnikov as Peter Pan and actress Tina Fey as Tinker Bell.
In this illustration released by Disney Parks, supermodel Gisele Bundchen, left, is portrayed as Wendy Darling, beckoned by dancer Mikhail Baryshnikov as Peter Pan and actress Tina Fey as Tinker Bell.   (AP Photo/Disney Resorts, Annie Leibovitz)
Treasury Secretary Henry Paulson announces the biggest overhaul of financial regulation since the Great Depression, Monday, March 31, 2008, at the Treasury Department in Washington.
Treasury Secretary Henry Paulson announces the biggest overhaul of financial regulation since the Great Depression, Monday, March 31, 2008, at the Treasury Department in Washington.   (AP Photo/J. Scott Applewhite)
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Investers begin to look for a silver lining
Wall Street Journal

Massive debt run up made disaster inevitable
AlterNet

 
Henry Paulson • Bear Stearns • housing crisis • subprime crisis • Allan Sloan

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