Here we’re going to hit on a new topic: Jury economics and how you can really feel the market bubbling when the juries appear.  Two hedge fund managers for Bear Stearns were indicted on securities fraud and could face years in jail for concealing problems in the Bear Stearns funds that were backed by various loans, mostly in the subprime industry

Its not soon after a market meltdown that information appears about the arrest or indictment of people on certain charges, especially when in regards to $1.4 Billion in hedge funds.  The indictment of these two managers is just the beginning for the hedge fund giant, as Bear Stearns probably has hundreds of more problems than just its hedge funds.

The problem with Bear Stearns is that these two hedge fund managers had quiet talks in between themselves about a future collapse in the sub prime market while they continued to promote the funds as a great buying opportunity.  At this point it seems hard to hang these two just for a failed fund.  Sure the fund might have been carrying too many debt backed securities but that is what hedge funds do, they speculate.  Now the investors are looking for anyone to blame for what was a part of a greater market meltdown.  What happened to Bear Stearns was not case specific, the subprime mortgage blow ups mixed with billions of bad debt in the form of real estate transactions were not very solid investments.

What the public has to come to terms with is that this is just a common happening in the financial world.  As banks, especially investment banks fail, it is usually due to one large fundamental change in their investments.  This usually includes the fact that billions of dollars in due loans were going bad and their borrowers were unwilling to pay.  Don’t blame the trader, blame the problem.  People are broke.