RS 5- Inside the Meltdown

This blog post is about the documentary called Inside the Meltdown and it is about the Stock Market crash in September 2008.

                On September 18^th 2008, there was an emergency meeting in the White House. If they didn’t do something about this then in a couple of days the whole world financial system will shut down. On March 10, Bear Stern’s stock going down and their running out of cash and they might be in trouble. People kept taking their money out and so the stock went into a free fall. They were big in mortgages and this did not help with the housing market because that had a really big drop in sales. The housing market was awful.  Everyone thought the housing market was a great way to make money, but in 2007 fore-closers started to happen and people started to stop putting their money into mortgages, Bear Sterns didn’t. The Federal Reserve Bank was Bear Sterns last hope. If FBR did not help Bear Sterns then Bear Sterns would go bankrupt. FBR found a lot of credit default swaps, Bear Sterns did not have the money to pay them back. If Bear Sterns went under it would have a domino effect in Wall Street.

                Therefore the FBR could not let Bear Sterns go under because Wall Street would go under.  They gave a loan to JP Morgan which was Bear Sterns bank, and JP Morgan gave the loan to Bear Sterns. The next morning the news went out the next day and was basically singling out Bear Sterns and this was an instant death sentence.  Every investor basically sold all of the Bear Sterns stock they had so they did not lose a lot of money.

                Finally Bear Sterns was being sold to JP Morgan for $2 a stock and after that there was no such thing as Bear Sterns.

                People started buying houses with money they did not have. People started thinking their houses were going to make them rich, but that was not the case. The housing market went toxic and soon had a huge downfall. This was why we had a “recession”. So people owned banks a lot of money because they would never pay their housing bills. People thought if they bought a big house and then sold it for more money they would be super rich. That obviously wasn’t the case and these people soon went broke.

                As for Bear Sterns it is still today JP Morgan and JP Morgan is still a Fortune 500 company. As for the housing market it is slowing creeping its way back up to being content again, but for a couple of years it was a really bad time to be a real estate contractor.