Bear Stearns rescue sparks false dawn as finance crisis perseveres

The rescue of Bear Stearns provided something of a false dawn for investors with many believing the ...

The rescue of Bear Stearns provided something of a false dawn for investors with many believing the central bank intervention would mean the worst of the financial market crisis was over. Credit spreads initially shrank and banking stocks even staged something of a rally. The recovery was, however, short-lived. This was because the central bank intervention may have eased concerns about liquidity but it caused markets to re-focus their attention on the earnings challenges faced by banks. Market-to-market writedowns may be nearing an end but profits are under threat from higher funding cos...