BofA Buys Merrill; Lehman Files for Bankruptcy; AIG, WaMu Teeter
| Sun Sep. 14, 2008 9:23 PM PDT
While you were sleeping, the landscape of the US financial system changed dramatically. CNBC is calling it, "The biggest shakeup in the history of the US financial system." The country is in a "once-in-a century" financial crisis, former Federal Reserve chairman Alan Greenspan said on ABC's "This Week" on Sunday. The New York Times reported late Sunday that Bank of America has reached a $44 billion deal to buy troubled investment firm Merrill Lynch. Another firm wasn't so lucky: Unable to find a buyer over the weekend, 158-year-old investment bank Lehman Brothers filed for bankruptcy Monday morning. Lehman's liquidation will mark the largest collapse of a Wall Street bank since Drexel Burnham Lambert folded in the wake of the junk bond scandal almost two decades ago.
The problems don't end there. "We will see other major financial firms fail," Greenspan said on "This Week." Giant insurance company American International Group (A.I.G.) asked the Federal Reserve for $40 billion, "without which the company may have only days to survive," according to the Times. Washington Mutual, too, may be in trouble, after its shares plummeted late last week and Moody's Investor Service downgraded the bank's debt to "junk" status. And in Europe, a Swiss newspaper reported that Swiss bank UBS will have to take another $5 billion in write-downs.
We'll see what happens over the course of the day on Monday, but A.I.G., at least, seems to be in serious trouble. Adam Bakhtiar, a CNBC analyst, called Sunday's events a "tidal wave of horrific news." James K. Galbraith, an economist and contributing writer for Mother Jones, wrote in an email that while he has "a pretty good record on attacking Wall Street," his "schadenfreude is very much under control at the moment":
The world will not be a better place with two free-standing investment banks—Goldman [Sachs] and Morgan [Stanley]—and a half-dozen major commercial banks, if that, running everything. Further, there is a risk that the unraveling will become disorderly and out of control from this point, as assets hit the market in fire sales and do not find takers. This will affect pension funds and greatly compound the collapse of the wealth position of the middle class.... The collapse of Wall Street will hit Main Street like Ike hit Houston.
So how do we get out of this crisis? Well, the prime mover of all of these problems is the collapse of the housing bubble in the United States. "There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go," Greenspan said Sunday. "And indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes."
The collapse of Lehman and the broadening crisis will undoubtedly be topic "A" for the presidential campaigns this week. Barack Obama and John McCain want to lead this country. How do they plan to respond to Monday morning's news?
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Comments
In all the fuss over sub-prime lending, which seems to be an excuse to pin the popping of the housing bubble on poor folks, it seems everyone's forgotten how much housing prices and appraisals were inflated. And not just family homes, but apartments too were insanely high, even down here in Alabama. Wages have lagged behind the actual cost of living, hell, of just surviving, for so long that you just about had to work two jobs to have shelter, and even then that probably meant buying it in the sub-prime market. The coming correction shouldn't be laid at the feet of people who were doing all they could to ensure their children lived in a half decent neighborhood. I remember a stockbroker who got out of the business because his clients were demanding 33% returns back before the junk bond scandal telling me how insane it was, how everyone knew it couldn't last and when the fall came it was going to be a disaster for investors, but greed ran the system and was going to run it into the ground. As we all know, that's what happened, and again with HealthSouth and Enron and on and on, ad infinitum. Same thing here. Sub-prime lenders knew what they were doing, and knew what the consequences would be; they just thought they'd be retired with golden parachutes before the fall. So place the blame where it belongs, on the salesmen and power brokers who got theirs and more by taking it from you.
Bravo, smitisan!
In case you didn't notice, the capitalists moved the factories overseas or unto U.S. possessions where they could tie into cheap foreign labor without the protection of U.S. labor laws or those costly environmental regulations. A "rush" to the bottom in a "consumer marketplace" is like cutting off the limb behind you. But, greed is not always associated with intelligence or other positive forces which look over the horizon to see their impact. No, it is much more the, "I've got mine - now" and tomorrow will take care of itself.
Of course, under the heel of oppressive capitalism, the lower classes will be hit with the bill to clean up the messes without having any input. The door will be propped open for the next bunch while the guilty escape with their new wealth. Their families will not be faced with the financial ruin they inflicted upon countless others. Just look at what happened with Bush buddy Ken Lay? Or, Phil Gramm?
Financial stability depends upon a float of capital distributed throughout the society. If a few start garnering it and manipulating it for just their good, society at large will let them get away with it as it seeks the new level. But, once the floodgates are pried open and "greed" as a form of morality is proclaimed to be "good", it is only a matter of time before balances become eschewed and with the total biases created to favor the few, the society ceases and starts to sink into anarchy. The anarchy actually was seeded by the greedy and when it blossoms inside of the general population, draconian government methods are called upon by the greedy few to "halt the spread of anarchy" they created by their own lawlessness. Hence, one witnesses the last twenty or thirty years of financial implosion created by one bubble after another created by nonregulated greed as markets were deregulated for profit of the few.
They have bankrupted you and me - and they now go after the future earnings of our children. The national debt rises for each family while the potential earning power of each family hits the basement. Foriegn countries and individuals hold the IOU's. Soon, we won't have the ability to buy those goods at Walmart. Corporate agriculture will begin shipping our food goods to more lucrative markets while increasing our food bills. The gas pumps are your clue here.
Cycle in a few cataclysmic events like Katrina or major earthquakes, or major snowstorms, or anything which nature can throw at us which we haven't even considered, and the system breaks down. Rather, one should say, the allusions of a supporting government pops. The propaganda bubbles floated by the media for the government are no match for reality.
I heard back in March that there was a planned economic Collapse (just as in 1929) in September 08, then Martial Law implimented, No Election, Merger of Mexico-Canada-USA into new economic structure aka government, along with the release of the Amero (the legislation has already passed)...
Dose anyone see the signs the begining of that Collapse here?
search Amero on youtube, for a shock
on the good side, Bush will be our dictator and will protect all of us...
Yea...
It does seem like a case of heads they win, tails we lose.
I recall that when Ronald Reagan broke the back of the striking air traffic controllers, the strikers were forbidden from returning to work as federal controllers.
Could anything be more just than making the people responsible for the current crisis pay for their errors? I propose in the first instance confiscating the salaries and properties of all the Wall Street high flyers who created this mess in order to create a fund to help the many people of moderate means who are going to be ruined by their incompetence. Secondly, that they be banned forever from working in any field involving even remotely related to banking.
Obviously, this will never happen, but it is nice to think about.
Does anyone think that these people might have a solution to global warming?
Shut down the global economy, let the poorest half or so of the planet starve and fight eachother to death, and then consolidate any power that they have not mannaged to "merge" and then finaly...., A One World Government !!!
that can then protect and care for us all!
its what we have been needing since
Gangus Con, Napolian, Hitler, and others tried so valiantly to give us
But Bush may end up getting the credit...
at least were safe from global warming...???
ps. im not fully joking
So let's get this straight. We have enough money to send over 2 billion A MONTH to Iraq.
We have enough money to bail out brokers and banks, the very ones that cried, screamed, pissed and wailed that they would and could do a MUCH better job on the American economy if ONLY they were DEREGULATED.
We do NOT have enough money to provide universal health care for each and every citizen in this country.
But it's our money, right?
Just sayin
Jonathan Stein:
Why would anyone want to be President right now???????
Only a real patriot can lead our country right now, because now is a "Moses moment", where our leaders are going to have to lead the COWS out of the meat packing plant into rediscovery of their own humanity.
Our new Moses is going to have to try and save the left 9/10th of our country from falling into RIGHT WING SERVITUDE, as there are a quite a few people left who do not want to become the RIGHT WING'S slaves.
VOTE DEMOCRATIC. Vote for Barack Obama and Joseph Biden, who together, with the help of the people, will do what is necessary to pull our country up by it's bootstraps from what the CONSERVATIVE REPUBLICAN RIGHT WING EXTREME has perpetrated on the people and our nations infrastructure.
We may stay in the desert for 40 years, but at least Obama/Biden will get us on the way to the promise land. McCain/Palin will have us continue to make bricks without straw for the Pharoah.
I highly recomended a 2 hour film/historical documentry, downloaded for free at
http://www.zeitgeistmovie.com/
its about how power corrupts and what those with power have done historically, through Religion, patriotism, and flat out LIES... Its really well done, high quality, not some cheep conspiricy video...
Must See
here is a youtube link to the CNN Lou Dobbs report about Bush signing in secret the 'North American Union...'
Agreed to by the Presidents of Mexico and Canada...
Wake up people, Banks collapsing is a small part of what is going on!!!
get ready for changes none of us can imagine...
http://www.youtube.com/watch?v=T74VA3xU0EA
if a story like thist can get on CNN, and still there is no uprising, that means all those drugs you people are on are working... Get off the Drugs, Wake Up... and talk to your neighbors, family, congressmen about how you feel about all this... sitting back and watching your favorite show, ironiccaly named 'American Idle', 'Survivor' (etc, etc, etc) while the corporations that are running our government and ruining the planet play endless creative commercials telling you to ask your doctor for more drugs is not going to help anything!!!!
PS. we spend 9 Billion a month in Iraq not 2... 250 million a day...
But tonight is Survivor so who cares right? but will anyone survive? what happens if the Chinese decide to cash in their bonds, but we dont have the money and they decide to take all of america as equity unitll we pay them back? accept if they take over america i think that means they assume their own loans right? at least we wont have to pay them back. But do you think we will have to learn Mandarin? or will they let us keep our languages? if our Karma hits us for what we did to the Native people of America, then we dont get to keep our langage...
sorry that wasent funny...
As of this writing, the markets have just suffered their worst decline since 9/11/2001. Unfortunately, the financial system is a house of cards and you can expect more collapses this week - AIG, WaMu, and Bank Of America is already tumbling on fears it won't be able to wrest both Countrywide and Merrill Lynch from their abyesses.
We got rid of the regulations that served us so well since the Great Depresssion (thank you, Phil Gramm, Reagan, Bush I & II and even Clinton etc.). If we get a second Great Depression, who will be our next FDR? McCain hasn't got a clue - at least he won't until Cindy has to sell off some houses. Obama is strangely muted. If the Fed doesn't cut rates tomorrow, look for another record down day.
The country is in a "once-in-a century" financial crisis, and we're only eight years into the century. Bravo.
Imagine the mess they can make if we give the GOP 4 MORE years. Didn't we start this century with a national surplus?
I get the feeling that the Feds knew about the impending collapse months ago but tried to keep a lid on it to give the Republicans a good shot at the presidency.
Too bad that the real victims of this debacle is the average shmoo who cautiously invested their savings over their entire working lives, hoping to live miderately comfortable in retirement. I'm one of those fools.
If I had it to do over, I'd stick my money under the mattress.
The U.S. financial crisis is like the con game from The Sting.
The Big Store is the mortgage and finance industry.
Doyle Lonnegan is new or re-fi mortgage holders, taxpayers, and individual retirement investors.
Henry Gondorff, Johnny Hooker, F.B.I. Agent Polk, and the "Big Store" shills are the powerful elites controlling the U.S. government, investment banks, institutional investment firms, and big real estate and building corporations.
Lt. Snyder is the media and phony government prosecutors and regulators, who will unwittingly complete this great con.
Buy Gold and Silver Now before its too late. The Feds have screwed us all and The Amero is just the next step. Get motivated and contact state and federal reps and senators. Flood them with our Emails now If you havent wrote them yet then you are part of the problem too. Rep or Dem doesnt matter its the peoples voice. Look for the Maverics
Scott Baker, Feduphoosier,
How much further do you think that the FED can cut interest rates? Below -100.00? As for you Feduphoosier, both Democrats and Republicans are responsible for this debacle. Both wings of the War Party have their greasy, grimey, slimey hands in the cookie jar and are culpable. But make no mistake about it, the American people themselves bear ultimate responsibility for this mess because they continue to elect wrecking-ball like leaders who do nothing but destroy a chunk of America through each and every term of office.
does anyone actually believe that the people elected Bush... they own computers where the votes are tallied with no transparency... Does anyone believe that anywhere near 40% of americans support Macain? or supported Bush? they own the polling too, that way it seems like a close race when they win by a small margin...
sorry folks, this is the end of america as we knew it...
This is the end
Beautiful friend
This is the end
My only friend the end
No safety or surprise the end
I'll never look into your eyes again
Yep, Americans better keep their money under their mattresses, because many more banks will go under and soon money won't be available for day to day transactions.
It won't be pretty... Remember what happened in Argentina in late 2001, early 2002? Remember Germany in 1923? When the US middle class will be entirely wiped out, watch out for the Big One, the Big Revolution and the end of the US republic. Hail Cesar!
Submitted by John Whiting (not verified) on Tue Sep. 16, 2008 1:43 AM PDT.
As the print periodicals go broke and the best journalists lose their jobs, expect to see more and more cogent analysis appearing in these unpaid comments pages, alongside the usual nutters. In the Great Depression, some of those lining up at the soup kitchens had PhD's.
Now that the Bush family has succeeded in fleecing the American middle-class people blind for the past 20 years, (does anyone remember the Savings and Loans scandal and the Bush family's implications?) they got the rich people to cannibalize one another so they can take the money and run. Disgusting. And they want us to believe McCain is leading in the polls... America, do you have any awareness left or have the spin doctors taken hold of it? I dare not answer...
Now that we've all vented our rage and impotence let's not do anything about it. Let's not petition our State Attorney Generals to revoke the corporate charters of these banks and brokerage houses that created this mess, with WaMu and Nations Bank disguised as Bank of America as public enemies 1 and 2. Let's not sue the RNC and DNC for fraud, bribery and violation of their oath of office for $1 trillion. Let's not boycott everything FOX from movies to TV to the internet. Now I know for sure what sheep on prozac look like.
It's amazing to me that the MSM hasn't pointed out John McCain's role in the Keating 5 scandal during the savings and loan meltdown of the 1980's. And this guy wants to be president.
Both parties have their fingerprints all over this mess. The ultimate repeal of the Glass -Steagall act in 1999 broke down the final barriers to investment banks getting in on the mortage action. Et tu, Bill Clinton?
Save a nice helping of blame for Alan Greenspan as well.
Add a few more ingredients for a perfect storm: a huge trade deficit, a massive federal deficit, lack of regulation, a pointless war, etc. I can see the fat lady entering stage right.
The Amero is an urban legend, as I learned, thanks to your suggestion of a google search. What was shocking to me is that you believed it.
http://www.snopes.com/politics/business/amero.asp
It is surprising that many people are speaking now about the same stuff Ron Paul and others talked about for a while and were called crazies.
I remember a friend of mine had a blog a few years back predicting the housing bubble was going to burst. He was called crazy, unpatriotic, un American. How dare he undermine this prosperity of buying homes at inflated values an reselling them for a profit.
Things happened just as he predicted.
Federal Reserve etc should have been fixed decades ago.
Let's expand on J. Whiting's "usual nutters" comment. I see Pierre Picard, Illusion, The Conservative Deflator, and...MarthaA takes the prize.
Painting BO and the Dems as messiahs; please....spare all of us from your perverse delusions of grandeur.
I invite you to find out how much money Freddie and Fannie gave Obama in the recent past. And...who ran, and currently runs, these institutions. The gov't IS the problem in this case. But, I forget, folks like MarthaA are the ones that depend on being spoon fed from the gov't, probably both verbally and monetarily.
Hey MarthaA, We are all born ignorant, but one must work hard to remain stupid. -Ben Franklin
Why don't we just have the government regulate the banks & the securities markets so this stuff can't happen?!?!
Oh.., wait...
They already DO, and they have done for decades!
Oh well.
At least we know our food supply is safe, our drugs are fully tested and proven, and our borders are completely secured against those who'd want to do Americans harm.
Since they've proven themselves in these other areas that they have functional control over, I say it's time to turn over our entire health care system to the know-it-alls in the central government.
Who's with me?
The American Ruse &
when Black Friday comes.
Honesty or lies?
Compassion or greed?
Intelligence or narrow-minded?
Guts - or go along to get along?
Ralph Nader
Cynthia McKinney
Ron Paul
Mike Gravel
Dennis Kucinich
Jesse Ventura
H. Ross Perot
President Carter
JFK RFK MLK Malcolm
And that golden-parachute bitch, who is the poster-child of fired failures, Carly Fiorina (?), marches on with her huffy-puffy ignorant remarks to tank the Republicans in a hail of belly-aching laughter. Looks like McCain will have a tough time outrunning his own torpedo -- Red November, anyone?!
Yes, Fiorina was a small part of the golden-parachute crowd. But, to imply one would not take the same deal if and when it is offered is simply disingenuous. We're not talking Dennis Kozlowski of Tyco fame here. Fiorina did nothing criminal here, she simply did not measure up. and, Speaking of not measuring up, and criminal behavior, let's look at Franklin Raines head of Fannie Mae under the last Dem administration. Set for life on the public's dime. So, pursuing this further, ask yourself if BO got any money from this entity for his recent two year stint at running for president.
It's funny how we only remember what we want to.
There's no excuse for allowing the collapse of the U.S. economy to happen.
No amnesty, no pardons.
Pursue the Bush administration beyond January 20 until they are brought to justice.
FREE AMERICA
REVOLUTIONARY (DIRECT) DEMOCRACY
Submitted by Chris (not verified) on Sun Sep. 21, 2008 2:26 PM PDT.
Thanx @Change-a-Comin for your video link.
Great article.
Maybe I will link to this on one of my pages.
Who wrecked the economy is a
Submitted by AdamH on Tue Apr. 28, 2009 2:19 AM PDT.
Who wrecked the economy is a very broad question and perhaps if we already find the answer it is nonsense. We cannot blame anybody else for the existing economic downturn. Bankruptcy is never a pleasant thing to contemplate. If you think you might have to file for bankruptcy protection, there are two options. Chapter 7 is where you have little or no property and you have an unmanageable amount of debt, credit card or otherwise and no quick payday loan can help. Chapter 11 is for paying off a percentage of the debt, if you are facing foreclosure or repossession. Chapter 13 filing gives you 3 to 5 years to pay off a portion of your debts. Bankruptcy stays on your credit report for up to ten years, depending on what type, and not disclosing it is a crime.However, bankruptcy is among the debt relief options you have, as odious as it is.
