Commenter Stormy Dragon on 2007-09-18:

And in either case, while these foreclosures are no doubt excruciating for the families involved, I find it rather incredible to suggest that something affecting less than two tenths of one percent of the households in the US is going to crash the entire national economy.

I’m starting to think the housing bubble is this year’s ’summer of the shark’ story.

This weekend:

With a deal finally struck, JPMorgan Chase & Co. will embark on the tough task of absorbing Bear Stearns Cos., once among its biggest rivals on Wall Street.

As the assimilation proceeds, the financial industry wants to know exactly how badly Bear Stearns bet on mortgage-backed investments. Unwinding the nation’s fifth-biggest investment houses should provide some insight into what other financial institutions might have on their books.

JPMorgan’s acquisition of Bear Stearns for the shockingly low price of $2 per share, or $236.2 million, occurred Sunday night, in a deal that was fast-tracked by the federal government to avoid a bankruptcy. A complete collapse of Bear Stearns might have completely crushed the already-dwindling confidence in the global financial system, which has frozen up after last year’s collapse of the subprime mortgage market.

Bear Stearns was the most exposed to risky bets on the loans; it is now the first major bank to be undone by that market’s collapse.

H/T: Commenter Ted, whose encyclopedic memory of such discussions is impressive.