Economic Crossroads

[belfastuniguy 18]

Lehman set to go into insolvency

Preparations are being made for US investment bank Lehman Brothers to file for bankruptcy protection.

The firm was pushed to the brink on Sunday after UK bank Barclays pulled out of talks to buy most of Lehman.

If no new financing is found before Wall Street opens on Monday, Lehman will have to seek so-called Chapter 11 bankruptcy protection.

This could result in a severe shock to the global financial system, as banks unwind their complex deals with Lehman.

It could take weeks or even months to complete and put banks around the world in a state of extreme uncertainty.

In the UK, accountancy firm PWC has been lined up to run the British operations of Lehman.

BBC business editor Robert Peston on the potential implications

BBC business editor Robert Peston says Barclays' decision to walk away from a Lehman deal was a huge setback for the effort to rescue the fourth-largest investment bank in the United States.

A source close to the talks told the BBC that Barclays was unlikely to change its mind.

Barclays terminated the negotiations because it was unable to obtain guarantees in relation to financial commitments faced by Lehman when markets open on Monday.

Unless the US government does a U-turn and puts taxpayers' money into Lehman, the bank will have to file for bankruptcy protection.

Bad bank, good bank

The rescue effort for Lehman is being co-ordinated by the US Treasury and the New York Federal Reserve.

In the light of the credit crunch and the parlous state of financial markets, Barclays feels it would be running a crazy risk if it took [Lehman's obligations] on without any protection right now BBC business editor Robert Peston Robert Peston's BBC blog

The US government had hoped to arrange a bailout under which other US investment banks - such as Citigroup, JPMorgan Chase, Morgan Stanley and Goldman Sachs - would finance a "bad bank" that would hold the most "toxic" investments of Lehman in the property and mortgage market.

The "good bank" or rest of the firm, including its investment and wealth management arms, would then be sold to another financial institution, for example Bank of America or the UK's Barclays.

Although such a deal would have cost the other investment banks millions, it might have restored confidence in the sector and avoided a sharp drop in the share price of all banks.

However, it appears that this plan is falling apart.

"The only thing that can prevent Lehman collapsing would be a huge injection of taxpayers' money," a banker close to the talks told the BBC, but added that US Treasury Secretary "Hank Paulson has made it clear he doesn't want to do that".

Bank of America to buy Merrill?

Our business editor adds that in the light of the credit crunch and the parlous state of financial markets, Barclays feels it would be to risky to take on Lehman's obligations without any protection.

Bank of America, meanwhile, is said to be unconvinced that buying Lehman would be in the interest of its shareholders.

Instead, according to a report in the New York Times, Bank of America is in "advanced talks" to buy investment bank Merrill Lynch for more than $38bn.

Like other US investment banks Merrill has suffered losses of tens of billions of dollars in the subprime crisis, and has seen its share price plummet during recent months.

'Too difficult to value'

"No other large firm should buy Lehman whole - its toxic real estate and securities are too difficult to value," said Peter Morici of the business school of the University of Maryland.

"Only a fool would think he could fairly assess their value, unless those are assigned them a value of zero."

Lehman is up for sale after it reported a $3.9bn (£2.2bn) quarterly loss last week amid concerns over its long term financial viability.

The firm's share price has plummeted as fears over its future have mounted.

Unless a bailout deal can be arranged and another large bank steps up to buy the good bits of Lehman, the US firm will have to file for bankruptcy protection.

This would deal a severe blow to the global banking industry, which is based on the expectation that the other party will always honour its commitments.

It could take weeks or months to unwind Lehman's complex deals with and obligations to other banks, both inside and outside the US.

'Difficult decision'

Former Federal Reserve boss Alan Greenspan said the US government faces "very difficult decisions" over Lehman if it cannot secure a rescue deal that does not involve public funds.

"They [will then] have to make a very difficult decision as to whether or not they allow it to liquidate or they support it," he said.

Yet Mr Greenspan said it would be "unsustainable" for the government to bail out every US bank that got itself into difficulty.

Predicting that Lehman would not be the last to require rescuing, Mr Greenspan added that this would not necessarily pose a problem.

"The ordinary course of financial change has winners and losers," he said.quote>

[coolotter88 2]

BBC reports Chapter 11. I thought they were going to go Chapter 7 which would mean liquidation of all assets.

[belfastuniguy 18]

Sep 14 2008 6:28PM EDT

Lehman: The End Game

As markets start to open in Asia, there's still no real clarity on what on earth is going on with Lehman Brothers. But the base-case scenario at this point is bankruptcy: ISDA's been netting derivatives transactions for four hours of Sunday afternoon, trying to minimize Lehman's counterparty risk in the event it goes bust, and the BBC is reporting that PWC has been lined up to run Lehman's UK operations under the same scenario.

Mohamed El-Erian isn't sugar-coating anything:

"This is an extremely, and I stress extremely, rare event. It also speaks to the more general notion that, in today's highly disrupted financial markets, the unthinkable is thinkable," said Mohamed El-Erian, the chief executive of Pimco, the world's biggest bond fund, based in Newport Beach, California.

Wall Street is already one step ahead: Lehman's bankruptcy would make Merrill Lynch's position extremely precarious, so Merrill seems to be stepping gratefully into the welcoming arms of Bank of America. Meanwhile, AIG is lining up an emergency capital-raising, in the hope that an extra $10 billion or so will give the market some confidence in its solvency.

Would a bankruptcy be Chapter 11 or Chapter 7? There's even less clarity on that, but my feeling is that it would be both: the brokerage units would file Chapter 7 and liquidate, while the holding company would file Chapter 11. In any event, things would surely get pretty messy for a while, and given the ability of financial markets over the past year to go from bad to worse, Paulson and Geithner are definitely risking a serious meltdown here.

That said, a meltdown would benefit no one, and Wall Street has every incentive to avoid it -- as we're seeing in the shotgun marriage of Merill and BofA. If people can keep their heads through the end of the week, this could turn out to be Wall Street's finest hour since John Pierpont Morgan used his own money to save the day during the panic of 1907.

It's a fluid situation, of course, as all the news stories are at pains to point out. But right now it looks like the best-case scenario is that Lehman goes bankrupt, with the rest of Wall Street playing a generally supportive role. And the worst-case scenario? You don't want to go there.

Update: Yes, it's bankruptcy, and liquidation, for Lehman.quote>

[belfastuniguy 18]

Lehman Brothers, the fourth-largest US investment bank, has filed for bankruptcy protection, dealing a blow to the fragile global financial system.

The news led to sharp falls in share prices around the world, and officials took measures to reassure markets.

Lehman had incurred losses of billions of dollars in the US mortgage market.

Merrill Lynch, also stung by the credit crunch, has agreed to be taken over by Bank of America, the latest twist in a dramatic turn of events on Wall Street.

In Washington the US President sought to reassure markets.

"In the long term I am confident that our financial markets are flexible and resilient and can deal with these adjustments", said George W Bush.

Tumbling bank stocks

Lehman's demise is being felt around the world:

• Stock markets and the US dollar have tumbled in reaction to Lehman's collapse, with banking shares hardest hit. UK bank HBOS saw its shares plummet 30%.
• Central banks have moved to reassure markets. The US Federal Reserve has broadened its emergency lending scheme and the UK and European central banks have injected a total of about $50bn (£28bn; 35bn euros) into the financial system.
• There are fears AIG, once the world's largest insurer, could also face collapse. It is taking steps to raise money amid reports it is seeking a $40bn emergency loan from the Fed.
• Bank of America's move to buy Merrill in a $50bn deal means that three of the top five US investment banks have fallen prey to the sub-prime crisis within six months.
• In the UK, accountants PricewaterhouseCoopers (PWC) have been appointed as administrators for Lehman.

'No cash'

PWC told a news conference in London that it is unclear whether Lehman's UK staff will get paid the $75m (£42m) that they are owed in wages this month.

"When we took over this morning, there was no cash in the company," said Tony Lomas from PWC.

"We still don't know what the position is - we will tell staff as soon as we know if we can, or if it is appropriate to pay staff on Friday."

In response to a question from a journalist he agreed it was extraordinary for a company like this to collapse.

"What it underlines to me is the importance of market confidence," Mr Lomas said.

"If no one wants to trade with you...there's no way back."

Central bank funds

The global financial economy has never in recent years been tested by quite such a combination of accidents and jolts to confidence Robert Peston, BBC business editor Read Robert's blog In quotes: Lehman's demise Central banks intervene Calls to boost the ECB's role Analysis: An end to bank bail-outs?

Stock markets in Europe and Asia have dropped sharply and the dollar tumbled against the yen, the euro and the Swiss franc as Lehman's failure raised fears about the strength of the global financial system.

The FTSE 100 index of leading UK shares ended down 212.6 points or 3.9% to 5,204.2.

US shares on Wall Street also fell. Shortly after trading began the Dow Jones index was 304 points lower, or 2.7%, at 11,118.

To help stabilise the money markets, the Bank of England and the European Central Bank pumped in £5bn and 30bn euros respectively.

In addition, the Federal Reserve said that for the first time it would accept stocks owned by banks as collateral for short-term cash loans, broadening its emergency lending programme.

Talks collapse

Lehman Brothers filed for bankruptcy protection after a weekend of frantic activity on Wall Street.

Barclays and Bank of America had been in talks to rescue the bank, but negotiations faltered when it became clear that the US Treasury was strongly opposed to using government money to help clinch a deal.

How the events at Lehman Brothers unfolded

By Sunday evening, staff at Lehman's headquarters in New York were leaving with cardboard boxes as onlookers gathered to watch the bank's demise.

"I think the whole history - 150 years of effort and hard work - that's the most saddening part for me," said one Lehman employee as she left the building.

The bank, which employs about 25,000 staff worldwide, including 5,000 in the UK, was founded in 1850 by three brothers.

Lehman Brothers filed for Chapter 11 bankruptcy protection, which allows a company time to reorganise and devise a plan to pay creditors over time.

FROM THE TODAY PROGRAMME More from Today programme

It said that its broker-dealer division and asset management division Neuberger Berman Holdings would not be included in the filing.

'Extraordinary 24 hours'

Separately, Bank of America said it had agreed to buy investment bank Merrill Lynch for $50bn (£28bn), in a deal that will create the world's largest financial services company.

Three of the top five US investment banks have now fallen victim to the credit crunch.

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Even if the markets recover, it'll happen again unless there's more accountability

Martin, UK

Send us your comments

Lehman and Merrill join Bear Stearns, which was sold to JP Morgan for a knockdown price in March.

The BBC's business editor, Robert Peston, said that it had been Wall Street's most extraordinary 24 hours since the late 1920s.

He said that Merrill's sale was almost as shocking as Lehman's demise.

"The global financial economy has never in recent years been tested by quite such a combination of accidents and jolts to confidence," he said.quote>

Wall Street shares fell 2.72% when trading opened in New York in the midst of the financial turmoil caused by the bankruptcy of Lehman Brothers.

The benchmark Dow Jones index dropped almost 267.8 points at 11,154.2, while the broader S&P and technology-heavy Nasdaq indices sank too.

At close, the UK's FTSE 100 index had lost 3.92%, France's Cac 40 index shed 3.78% and Germany's Dax lost 2.74%.

Earlier, Asian markets were hit by the news with Australian shares down 1.8%.

Several of Asia's major stock exchanges - in Tokyo, Hong Kong, Shanghai and Seoul - were closed for holidays.

But in Singapore the STI dropped 3.3% to hit a two-year low.

And in Taiwan, the benchmark share index closed down 4%, and in India share prices fell by more than 3.35%.

In markets that were trading, banking, insurance and financial sectors suffered most after Lehman Brothers, the fourth-largest investment bank in the US, said it would file for bankruptcy protection.

Financial sector nerves

Insurance giant AIG was the biggest faller on the Dow Jones after rumours intensified that it had asked the Federal Reserve for a bridging loan of $40bn (£22bn) to help it rebuild its balance sheet.

While the firm has not yet made a comment, uncertainty over its future drove investors to wipe out about 45% off its share price leaving the stock at $6.70.

Shares in Bank of America, which earlier agreed to buy Merrill Lynch in all-share deal worth $50bn, followed suit.

The firm dropped more than 15% as investors considered the risks of Merrill's portfolio of mortgage-backed assets and the dilutive nature of the purchase, while shares in Merrill Lynch jumped 26%.

In the UK banking group HBOS closed down 17% and traded at 232.75 pence, after being behind 33% at one stage on concerns it and rivals face more write-downs and higher funding costs.

HBOS is more reliant than other major UK bank on borrowing in the wholesale markets for funding.

In the light of the fall in the value of its shares, HBOS issued a statement in an attempt to reassure investors.

"HBOS is a strong financial institution. The group has the strongest capital ratio of all the major UK domestic banks.

"As we reported at the interim results, we are comfortable with our funding profile. We have access to a diverse range of funding sources and that hasn't changed," it said.

'Dollar rally unsustainable'

On the London Bullion Market, the price of gold rose to 785.70 dollars per ounce, from 750.25 late on Friday.

Gold was bought as a safe haven and initially knocked the dollar to two-month lows against the yen.

The dollar fell against a number of currencies on concerns about the US financial system's stability, but it got some relief from lower oil prices, with US crude dropping almost $7 at one point to levels not seen since February.

Light, sweet crude dropped $4.53 to $96.65 on the New York Mercantile Exchange.

Meanwhile, the Bank of England on Monday injected £5bn (6.3bn euros, $9bn) into short-term money markets, and the European Central Bank (ECB) injected 30bn euros into European money markets to keep them going.

Anantha Nageswaran, head of investment research at Bank Julius Baer, said: "The dollar rally over the last two months was unsustainable and it was brought about by short-term liquidation pressures by many hedge funds and because of a mistaken feeling that the US economic numbers had turned the corner."

Loan fund

Lehman Brothers has suffered losses of billions of dollars in the sub-prime crisis, and has seen its share price plummet during recent months.

A consortium of international private sector banks and securities firms announced a new $70bn loan fund, intended for use by financial companies to help ease the credit shortage.

The US Central Bank, the Federal Reserve also made new moves to ease access to emergency credit for struggling financial companies, broadening the types of securities financial institutions can use to obtain emergency loans.quote>

Bank of America is to buy Merrill Lynch in a deal worth $50bn (£28bn) that will create a new financial giant.

The deal came amid a hectic weekend on Wall Street, with Lehman Brothers announcing that it would file for bankruptcy protection.

There were worries that Merrill would be the next bank to lose the confidence of investors as it has been hit hard by bad mortgage debt.

Merrill has written down more than $40bn of assets in the past year.

Under the terms of the deal, Bank of America will pay about $29 for each Merrill share.

While that represents a 70% premium to the closing share price on Friday, Merrill's share price stood at $50 in May and was above $90 at the start of 2007.

'Great opportunity'

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," said Bank of America chairman and chief executive Ken Lewis said in a statement.

Shares in Merrill Lynch rose 26% at $4.44 in late morning trade, while Bank of America saw its stock fell 14.2% at $28.94.

[The deal] catapults Bank of America into positions of strength in three businesses where they were weak James Ellman, Seacliff Capital

"Together, our companies are more valuable because of the synergies in our businesses."

The deal will also see three Merrill Lynch directors join the board of Bank of America.

"Merrill Lynch is a great global franchise and I look forward to working with Ken Lewis and our senior management teams to create what will be the leading financial institution in the world with the combination of these two firms," said John Thain, Merrill's chairman and chief executive.

The deal - which is expected to be completed in the first quarter of 2009 - has been approved by directors of both companies, but now will need the approval of shareholders and regulators.

Merrill's share price had fallen last week as Lehman Brothers undertook its ultimately unsuccessful search for a buyer.

Analysts said the combination of Bank of America and Merrill Lynch would be a good fit.

"It catapults Bank of America into positions of strength in three businesses where they were weak," said James Ellman from hedge fund Seacliff Capital.

"Now Bank of America has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world.quote>

[PhilsCafe 8]

Pretty scary... this means that no bank is safe now. However, maybe that means investment bankers become more careful in future.

[Easy Bakes 253]

Just for fun!

Brokers Believe Worst Is Over and Recommend Buying of Real Bargains

Wall Street in looking over the wreckage of the week, has come generally to the opinion that high grade investment issues can be bought now, without fear of a drastic decline. There is some difference of opinion as to whether not the correction must go further, but everyone realizes that the worst is over, and that there are bargains for those who are willing to buy conservatively and live through the immediate irregularity.

-- New York Herald Tribune, October 27, 1929

Gigantic Bank Pool Pledged To Avert Disaster as Second Big Crash Stuns Wall Street

Largest Financial Powers in the City Meet After Day of Hysterical Liquidation Sinking Prices Below Thursday's

By Laurence Stern

After the stock market had come crashing down again in a veritable deluge of forced and hysterical liquidation, word sped through the financial district last evening that the largest banks in the city were prepared to exert their organized power this morning to prevent further disaster.

Arrangements described as "fully adequate" were completed at a conference at the offices of J. P. Morgan & Co. at Broad and Wall Streets...

Although no formal statement was issued, it was the consensus of those at the meeting that the worst of the liquidation is over and that a natural demand for investment stocks now available on the bargain counter should go far toward an immediate restoration of trading stability.

-- The World, October 29, 1929quote>

Amazing how History repeats itself.

Mabey we NEED another great depression to instll the value of money

in the credt generation.

[fukuda 351]

Main feeling in the stock exchange

[Barbarossa 51]

.

  Edited September 7, 2012 by Barbarossa  

[belfastuniguy 18]

Stocks volatile amid uncertainty

Reaction from around the world

Stock markets were volatile after the collapse of the fourth-largest US investment bank, Lehman Brothers, which has filed for bankruptcy protection.

The Dow Jones industrial average shed 100 points in late afternoon trade, after the Federal Reserve said it would leave interest rates unchanged at 2%.

Before the announcement the benchmark index has risen slightly.

Elsewhere leading indexes ended lower with the UK's FTSE 100 3.4% lower, the Cac-40 1.9% down and the Dax down 1.6%.

Banking shares were badly hit with HBOS losing about 35% at one point.

Lehman Brothers, which may be about to sell its core assets to Barclays, became the latest victim of the global credit crunch on Monday.

Lehman's collapse has continued to reverberate:

• Central banks around the globe have pumped funds into the money markets, including $50bn (£28bn) from the US Federal Reserve, £20bn from the Bank of England and 70bn euros ($100bn; £56bn) from the European Central Bank.
• US insurer AIG saw its shares slump by more than 70% at one point amid continued uncertainty over its future.
• Global stock markets fell heavily for a second consecutive day.

Banks hit

The benchmark Dow Jones index had dropped some 500 points on Monday - its worst session since 11 September 2001.

The FTSE 100 index of leading UK shares fell 178.6 points to 5025 at close of trade - having earlier dipped below 5,000 points for the first time since June 2005.

Big banks can no longer be under any illusion that they can make big, stupid financial bets and expect taxpayers to pick up the bill Robert Peston, BBC business editor Read Robert's blog Barclays eyes Lehman assets US policy challenge Q&A: Lehman collapse Lehman pension scheme in deficit Credit crunch jargon explained

Japan's benchmark Nikkei 225 index dropped 5% to a three-year low, shares in South Korea and Hong Kong shed almost 6% and Shanghai's index fell by about 3%.

Markets in Taipei and Singapore were also sharply down, and the pattern was repeated in Australia and New Zealand, although the falls were smaller.

Central banks around the world carried out emergency measures on Tuesday to keep markets liquid.

The extra funding came as the interest rates at which banks lend to each other rocketed - as they did at the start of the credit crunch. This is seen as a sign of falling confidence between the banks.

Overnight, sterling Libor increased from 5.5% to 6.8%, and the dollar Libor rate increased from 3.1% to 6.4%.

The extra £20bn (25bn euros; $36bn) put into short-term money markets by the Bank of Enlgand was "in response to conditions in the short-term money markets", it said.

The injection was four times the sum seen on Monday after Lehman's collapse

The Bank of Japan has also carried out two injections of a combined 2.5 trillion yen ($24.1bn; £13bn)

HAVE YOUR SAY

More regulation? Maybe, but more important in my judgment is using the regulation more effectively

Michael, Dallas, Texas

Send us your comments

Australia and India also pumping cash into their money markets

Bank stocks were hard hit again across Europe; in London HBOS was down by about 22%, having fallen 35% at one point, and Royal Bank of Scotland was down 10%.

Barclays Bank - which said it was in talks to take on some of Lehman's US operations - was one of the big fallers, down more than 4.7%.

In Paris, Credit Agricole and Societe Generale were both down more than 4.5%, while in Germany Commerzbank dropped 12% and Deutsche Bank fell 4.5%.

Meanwhile, Japanese-registered Lehman Brothers Japan and Lehman Brothers Holdings have applied to the Tokyo District Court for bankruptcy protection.

'Crisis'

On the currency markets, the dollar slid to a four-month low against the yen before reversing earlier losses.

The collapse of Lehman, which had incurred billions of dollars of losses from the failing US mortgage market, has raised fears that other financial institutions could be hit.

"We're in the middle of a crisis," said YK Chan at Phillip Asset Management in Hong Kong.

Meanwhile, there were fears that AIG, one of the world's largest insurers, could also face collapse.

The State of New York announced a "multi-billion dollar financing plan" on Monday to stabilise the insurer's finances.

'Rough spots' ahead

On Monday, US Treasury Secretary Henry Paulson said the US was "working through a difficult period in our financial markets right now as we work off some of the past excesses".

Henry Paulson was upbeat despite the turmoil

He said Americans could remain confident in the "soundness and resilience" of the US financial system.

But he warned that uncertainty remained and it was likely that there would be further "rough spots" ahead until the correction of the US housing market was completed.

Mr Paulson said he was committed to working with regulators in the US and abroad, as well as policymakers in Congress to take the necessary steps "to maintain the stability and orderliness of our financial markets".

But he gave no details of what such steps might mean.quote>

 

Its all rather depressing really. I disagree that all banks are now possible candidates for failure. In general European and Asian banks are less likely to suffer the fate of some of the American banks. The only European bank to suffer major problems with Northern Rock. The rest are relatively safe, though some, such as HBOS have suffered massive losses.

The wider impacts are yet to be determined really. That will take more time to see, though many will have already seen themselves directly effected with the falling stock markets, my family have had 10's upon 10's of thousands wiped from their portfolio. Sane happened earlier in year, but the markets will eventually recover.

The next, maybe, 9 months will be difficult, but Ido not predict nor wish for another 'depression'

[fukuda 351]

AIG is deadly wounded :/

[Jazzmaster 716]

WaMu OR AIG could be next...I'm getting a little worried here myself.  Ironic part is lately the teachers keep saying "the reason we teach history in our schools is to not repeat it".  Luckily the Dow went up 114 points or something, but I'm not gonna let that or the government's words (e.g. "the fundamentals of our economy are strong" ) mask that our country is in trouble.

[coolotter88 2]

I heard AIG is planning to file for chapter 11 protection tomorrow, anyone who owns AIG should sell now.

[Easy Bakes 253]

*sings*

Another one bites the dust

[TV-VCR 14]

It seems the FRB lent AIG 65 billion in exchange for 79.9 percent equity stake and the right to suspend dividends to stock

[coolotter88 2]

Yes, AIG was bailed out. So they're not going to File. Had the Government not loaned 85 billion dollars, the company would be filing today.

http://news.bbc.co.uk/2/hi/business/7620127.stm

[Easy Bakes 253]

I still think thier throwing money down a hole.

these companies are in trouble becasue of  greed and bad the financial decsions

of thier managers.They did it to themselevs. I say let them fail.

[Barbarossa 51]

.

  Edited September 7, 2012 by Barbarossa  

[Odainsaker 2,134]

I wonder how much of this $85,000,000,000 USD is going to company officials and corporate players worldwide cashing out their own options while the rest of us will be left standing in line begging for our own money back.  Is apparently already happening at the offices of AIG's overseas Asian branch AIA in Singapore, with crowds lined up outside hoping to cancel their policies and salvage their finances, while the managers inside busily cash out their own interests first in Enron fashion while the money is temporarily available.  At least they were nice enough to hand out press releases telling people not to panic and trust in them.  A lot of lives are being ruined as people's insurance and retirement investments are evaporated thanks to years of across-the-board mismanagement.  Oh yes, the fundamentals of the Hoover Bush Economy are sound indeed!  At least we never bought into the Administration's idea of privatizing government-backed Social Security into the stock market and into the hands of these imploding insurance and investment houses.

Of course, we would not use the $85,000,000,000 earlier to protect unfortunate homeowners whose mis-mortgages from unscrupulous lending sharks are the underlying preventative source of the credit disaster now toppling the Wall Street firms.  Oh no...that would have rewarded homeowners whose overly tight financing skirted dangerous risks and who were unlikely to vote Republican anyway.  The lifeboats are reserved for First Class passengers and Officer Crew only.

[DuskTrooper 314]

I heard that Washington Mutual is in some deep bollocks as well, with their stock down over 80 percent for the year...

How many is that so far? On the quicklist is Fannie and Freddie, Lehman, Bear Stearnes, AIG...

Not good at all.

[Boggy1 45]

This really is mainly our fault isn't it though? I know the banks could be blamed for giving out loans and mortgages left and right and sideways, but it is us who have been living totally beyond our means. It's driven by greed and the want for profit. Everyone has to have the newest and best stuff, paying for it with money they simply don't have. The entire system is entirely unsustainable.

I don't see this getting better for a while. I think maybe we do need another Great Depression, just to wake people up a bit. Otherwise the cycle shall start all over again.

[Gridlock 9]

Id say a great depression is the very  last thing we need , banks recalling loans and mortgages , no thanks , that doesnt sound like fun at all .Your money becoming worthless , you realy need to be careful what you wish for .

US citizens may have been a little over indulging , but the present financial meltdown is nothing to do with US citizens  , although thats what your goverment would choose that you believe .

Imho this is partly the result of  the aftermath of 9/11 and a further 7-8 years of war . Also an  unattended $6.92 trillion national debt  does not help .

Also the US is guilty of empire building and everyone knows that ultimatley this destroys the currency .

Maybe it would be best to put the whole US finacial system through a bankruptcy firm and start a fresh ?.

So i would say to you that it is not  the US citizens fault at all ,its the govement and central banks that are guilty of gross misconduct and negligence .

Also dont forget the great depression , didnt just happen , it was manufactured by wealthy businessmen , to make even more money from the casulties .

[Easy Bakes 253]

Originally posted by: Odainsaker

I wonder how much of this $85,000,000,000 USD is going to company officials and corporate players worldwide cashing out their own options while the rest of us will be left standing in line begging for our own money back.  Is apparently already happening at the offices of AIG's overseas Asian branch AIA in Singapore, with crowds lined up outside hoping to cancel their policies and salvage their finances, while the managers inside busily cash out their own interests first in Enron fashion while the money is temporarily available.  At least they were nice enough to hand out press releases telling people not to panic and trust in them.  A lot of lives are being ruined as people's insurance and retirement investments are evaporated thanks to years of across-the-board mismanagement.  Oh yes, the fundamentals of the Hoover Bush Economy are sound indeed!  At least we never bought into the Administration's idea of privatizing government-backed Social Security into the stock market and into the hands of these imploding insurance and investment houses.quote>

Probably all of it. Even though it should be the reverse, every bit of that money should go to

customers who want to cash out thier retirerment accounts and not to the management who want to take thier severance packages and bail out.

[zzazzmatazz 3]

Its over everyone.

Its all over.

The Federal Reserve just bought half of the homes in the country and now is buying up Wall Street...and they didnt have to pay a penny. They just had to click a mouse.

Poof! $200 billion.

Actually printing the money cost time and material.

Now, here's the best part...we pay back the Federal Reserve with tax dollars.

The war is over. They won. Our country is now officially gone.

[Micah 16]

I'm outraged. No wait, more like pissed.

What happened to capitalism?

[Hanson784 165]

^It imploded on itself? Jim Cramer (from Mad Money) said on MSNBC that "we're all Communist now!" Mad is an understatement of what he and others are feeling.

The events over the last couple of days have been a little depressing honestly, and I'm kind of shocked. I probably shouldn't be given greedy Hedge Funds managers, the dropping value of the dollar, America's over use of credit cards, the Iraq war and the housing crisis. The government and the Fed should re-take Finance and Economics 101.

This is going to reshape America; hopefully for better. I'll keep my passport handy just in case.

[Boggy1 45]

Gridlock: I didn't actually mention US citizens once, at all, in my post. I said us, as in, the human race. It is mainly our fault, because we really are living far beyond our means.

Morgan Stanley is now apparently going to fail, and be taken over.

[frdrcklim 139]

This is sad. In some way, I don't want this to happen. Most countries, such as mine, depend on the US economic growth for their country to post growth (even if there is decoupling and all that). In another way, this is very exciting. I don't know what's gonna happen next and it makes me want to jump. In some way, watching the news has become as exciting watching a movie.

[Easy Bakes 253]

Originally posted by: Micah I'm outraged. No wait, more like pissed.

What happened to capitalism?quote>

 

Its still there. It just out striped genuine economic growth.

When prices rise out of control, everyone using credit to buy stuff, everyone in debt, and wages not riseing along with prices, eventualy its all going to collapse at some point.

I wish Retailers luck this upcoming Christmas shoping season. Its going to be bad.

[PhilsCafe 8]

capitalism is a myth... however, I don't think everything's over yet. Probably there aren't going to be more bankruptcies, because the world market couldn't survive many more. Looks like Lehman Brothers was just the scapegoat, while other banks are now taken over by smaller, more stable ones... or federally funded.

[saltandsauce 0]

not the leman brothrs but still related, HBOS got taken over by Lloyds TSB to make some bloated monster bank. HBOS is halifax and the bank of Scotland (not the royal bank of scotland) so basically this new company effectivley owns a controlling share in Britain

the shares plummeted so a "volentary merger" went ahead, backed by the government. 40,000 jobs are estimated to be lost in cuts from branches, office jobs etc. economic watchdogs were silenced in this case.