Monday, September 15, 2008
Nightmare on Wall Street
Despite President Bush's assurances about the state of the economy, two of the country's largest financial institutions, essentially crumbled over the weekend.
Lehman Brothers declared plans to file for bankruptcy on Sunday. And sensing impending doom, Merrill Lynch sold out to Bank of America for about $50 billion.
Also alarming, American International Group (AIG) sought a $40 billion lifeline from the federal reserve. [NYT]
And then there's Goldman Sachs and Morgan Stanley standing unassisted, albeit on shaky ground. Both will report quarterly earnings this week, but were down 12 and 14 percent, respectively, when the DOW closed today, according to The Washington Post.
So what are you to derive? This is some scary shit. Although, I admit, unless you have a job in finance, I don't really know why. Sure it all equates to a weaker dollar, and maybe even issues with your bank (I'm talking to you fellow WaMu customers. Some are projecting it will be the next big bank to fold. Of course you're insured for up to $100,000. But if it does, in fact, fold, claiming your money from the FDIC directly seems like a hassle; as does making a run on the bank, which also seems sorta crazy and rash. What to do?) but the media need to do a better job explaining how all of the hullabaloo affects, you know, normal people.