Bloody Sunday: Wall Street Is Hit by Financial Tsunami

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Those who have been following the financial news will not be surprised, those still wearing their rose-colored glasses will need to make a few adjustments.

Bloody Sunday: Wall Street Is Hit by Financial Tsunami
By CNBC.com With Wires | 14 Sep 2008 | 10:32 PM ET

The U.S. financial system was badly shaken Sunday by the expected failure of ****Lehman Brothers ****, the surprise takeover of Merrill Lynch and big asset sales by major insurer American International Group.

The developments indicate that chief executives on Wall Street and regulators in Washington are accepting that massive triage is necessary in the face of the 13-month old credit crisis and destructive U.S. housing bust.

“The U.S. financial system is finding the tectonic plates underneath its foundation are shifting like they have never shifted before,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.“It’s a new financial world on the verge of a complete reorganization.”

Growing expectations that Lehman will become Wall Street’s most high profile bankruptcy since junk bond specialist Drexel Burnham Lambert collapsed in 1990 sparked a sell-off in U.S. asset prices.

Both US stock futures and the dollar plunged](http://www.cnbc.com/id/26708947/site/14081545/) in reaction to the turmoil on Wall Street.

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Stay the course. :):):slight_smile:

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Holy crap.

Are the feds going to pay out on all the retirement plans these guys manage?

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They are not bailing out Lehman. Lehman will file for bankrupcy.

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I wonder how many more hits this house of cards can stand before it all comes tumbling down? I think the decade of 2010 is going to make the 1930’s look like a recession.

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Leman doesn’t own the assets in those retirement plans the clients do.:roll:

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McCain wrong and Obama even more so.

They both want more regulation. That is the wrong answer.

McCain:

“The McCain-Palin administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street. We will rebuild confidence in our markets and restore our leadership in the financial world.”

Obama:

“The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren’t minding the store,” Obama said in a statement. “Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression.”

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Wait until the reality of the gross underfunding and guaranteed failure of Medicare and Social Security kicks in.:shock:

It’s not going to be pretty and none of the politicians have any desire to tell the American public the truth.:frowning:

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Do you have any ideas for remedying the situation?

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Where have you been, out listening to Republican propaganda again no doubt. Let me be the first to share the bad news with you Mr. My-money-is-safe-in-the-bank, last night the banking laws were changed to allow banks to use customer deposits to offset losses in other accounts. It appears that the one of the four Horsemen of the Apocalypse have been loosed on your bank & retirement accounts, ain’t friggin’ globalization grand, you will now be forced to fund the excesses of those you hate, just another Bush legacy in the making, happy motoring.

World’s banks to back $70bn liquidity pool

By Saskia Scholtes in New York and Krishna Guha in Washington
Published: September 15 2008 18:44 | Last updated: September 15 2008 18:44

Amid a dramatic series of private and public sector initiatives intended to mitigate the impact of the failure of Lehman Brothers, 11 of the world’s biggest banks have agreed to pool $70bn in a giant liquidity fund to help counter disruption in short-term funding markets.

The creation of the fund came in conjunction with moves from the US Federal Reserve to ease its lending terms dramatically – allowing investment banks to pledge equities and loans in return for cash – and the temporary suspension of a rule that normally prohibits deposit-taking banks from using deposits to help finance their investment banking subsidiaries. Both the Fed moves and the new private sector liquidity fund are specifically aimed at countering a feared disruption in the so-called triparty repo market, – a market in which investment banks secure short-term funding for their balance sheets,** much of it from money market mutual funds**.

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Sure,

All of them would be politically unpopular.

Remember when Bush showed great courage in touching “the third rail of politics” and proposed a partial privatization of Social Security?

It was probably our last best chance at actually doing something.

Medicare is even even worse shape and when is the last time you heard a politician even mention it?

Neither party is talking about these very real issues and they are just hoping to put it off for the next guy to deal with.

And some wonder why all the cynicism over politics.:shock:

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Now that is just stupid Joey.

The question was regarding retirement accounts not bank deposits.

If you own funds managed by Lehman brothers it is you that owns the assets not Lehman.

They will go bankrupt but the client held assets remain.

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Too funny!

Some truly dim bulb left me this:

Bloody Sunday: Wall… 9/15/08 1:31 PM rong

I guess his “w” key doesn’t work. I hope he spell checks his reports.:roll:

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Really now Mikey, everyone knows your guy makes up the rules as he chooses. If they don’t steal it outright they will inflate any value that remains. This thing doesn’t look too good for your guy, hope you have a 2nd option ready.

BTW the reddy has all the earmarks of Decker. :stuck_out_tongue:

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Done! Chapter 11 70 Billion

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No need to worry…:mrgreen::twisted:

Bush feels the pain :slight_smile:

Earlier Monday, President Bush acknowledged the “pain” of investors and workers in the finance industry, but assured the public that the government is working to iron out the problems.

“I know Americans are concerned about the adjustments that are taking place in our financial markets,” said Bush, speaking in the White House Rose Garden. “We are working to reduce disruptions and minimize the impact on the [broader economy].”

Bush didn’t offer much detail as the Dow plunged more than 200 points and the finance industry suffered one of its worst crises ever, stemming from its investments in the battered real estate sector.

“In the short run, adjustments in the financial markets can be painful, for people worried about their investments, and for employees of the firms,” said Bush.

In addition to the Lehman Brothers bankruptcy, here are a couple of the latest developments in the finance sector:
Merrill: Bank of America (BAC, Fortune 500) said it would buy Merrill Lynch (MER, Fortune 500) for $50 billion in stock, or $29. Merrill’s stock surged nearly 15% on the news to $19.59 a share, while Bank of America plunged 17% to $27.80 a share.

AIG: The stock plunged 52% to $5.81 a share for AIG (AIG, Fortune 500), after the insurance giant said it was getting ready to announce a restructuring.

Art Hogan, chief market strategist at Jefferies & Co., described this as the biggest economic crisis since the Great Depression of the 1930s and the railroad bankruptcies of the 1800s.

"We’ve never witnessed this before," said Hogan before Bush’s speech. "There’s no road map for this."

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So lacking any evidence or facts you accuse McCain(I assume) of somehow being responsible for Lehman Bros. going bankrupt?:roll::roll:

Somebody is sure making it up.:stuck_out_tongue:

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Note to Bush haters(BTW-he’s not running)

Please demonstrate how Bush policy is responsible for the current mess.

Maybe he is but I would sure would like to know based on something other than he’s the guy in office it must be his fault.

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Not me. I proudly proclaim that, to my knowledge, McCain (as a part of the Keating Five) had only to do with the collapse of the federal credit unions. He has yet to be linked to the failure of banks.

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The money in your brokerage account is safe?

Individuals should realize that brokerage accounts are required by the Securities and Exchange Commission to be kept separately from a brokerage firm’s corporate finances, and are consequently secure even if a company goes bankrupt. So if you consider the case of Lehman Brothers, you are protected in multiple ways.

First, it’s the holding company; not the brokerage firm, that is in bankruptcy, according to Steve Harbeck, chief executive of the Securities Investor Protection Corp., the entity that provides insurance for brokerage accounts. Second, the Securities and Exchange Commission is watching institutions closely to make sure that brokers are keeping client money separate from the corporations’ assets in these messy times. In the case of Lehman, Harbeck says the SEC specifically assured him that client money and investments are secure.

In the event that money would not be secure and an institution would collapse, then SIPC will step in and provide coverage so individuals do not lose money.