The Asian markets were closed on Monday, so this is the fallout from the U.S. markets yesterday.

However, 5.5% is still bad!

Lehman Brothers was founded in 1850. You know it's a crisis when the bankruptcies are hitting companies older than John McCain.

Don't panic. Our Commander-in-Chief is crisis-tested and has been working around the clock to take command of the situation.

I can't help but think the economy would be in better shape if we weren't spending a trillion or so in Iraq.

FORCE CONGRESS TO IMPEACH, call Pelosi @1-202-225-0100 DEMAND IMPEACHMENT.

You would do everyone a great service if you made explicit the difference between investment 'banks' -- which are more like casinos -- and deposit banks.

There could be a run on bank deposits because people don't know the difference, and that kind of panic could do real damage. Deposits are insured, and people would not lose their money, but because Republicans don't want an informed electorate the average person -- including all those red-state fucks-ups who think Sarah Palin is a savior -- this could still get out of control.

....

On second thought, this would be well-deserved carnage, so forget I said anything.

Pretty soon you are going to start seeing quality middle sized and larger companies going down as they become unable to secure short term financing. Once manufacturing firms start going down because failing banks are calling their credit lines we will all be in a world of hurt.

Republican ideologues should never be allowed near the levers of power again. Phil Gramme ought to be in jail.

AIG was big time. When I was in graduate school, people salivated at the possibility of getting its summer internship program in country risk rating.

I can't help but think the economy would be in better shape if we weren't spending a trillion or so in Iraq. Posted by: Arachnae

No shit. Iraq really is the primary touchstone for every problem facing the country right now. Just below this would be Greenspan testifying before Congress that lowering taxes would be fine and that paying down the national debt was bad. Fucking idiot.

You would do everyone a great service if you made explicit the difference between investment 'banks' -- which are more like casinos -- and deposit banks.Posted by: The Phantom

In terms of their respective effects on the economy, the difference is pretty meaningless at this point. In any case, WaMu's troubles are pretty much what took down Bear-Sterns and the same as what tanked F&F - bad RE lending.

now that the dow is the same as it was in april 1999, does this mean we can now party like it was 1999 again?

We are entering very interesting times here. It is safe to say the house of derivatives is coming unglued at a fast pace and given the size of the notional exposure (several tens of trillions of dollars for each of the top few banks/brokers; yes, trillion with a T) and the lack of disclosure surrounding derivatives, a lot of shit will hit the fan. The Fed is obviously working overtime to prevent this, but these are the same folks who brought us this disaster. Why do we trust them to know how to fix a mess they didn't have the wisdom to prevent (despite warnings from the likes of Buffett and scores of others)?

"Larry Kudlow on CNBC notes that there’s a ton of private equity money dying to dive in, but terrible regulatory environment doesn’t allow it"

STOP THE INSANITY!

Here's what I would LOVE to see:

S&P and Moody's have cut Larry Kudlow's economic forecasting rating to JUNK.

"Pretty soon you are going to start seeing quality middle sized and larger companies going down as they become unable to secure short term financing."

I'm pretty sure this is true. But it affects high tech startups as well. One of my clients lost their financing last week. It seems the pool of money for new product development is drying up. The money being used to shore up shaky financial institutions has to come from somewhere. Apparently, it's the money my clients use to finance new inventions. And that's bad. Not just for me, but for everyone.

America doesn't have the advantages we used to. Our manufacturing can be matched or exceed by dozens of countries with healthier economies. Our education is substandard by the standards of industrialized countries. We don't really have the energy and mineral resources to create any kind of export economy (or even stop importing). The only real advantage we have is that we Americans have traditionally been unusually creative in developing new technologies. But if we can't fund new ventures, we take away that advantage. Without new development, we essentially become China, but with higher wages. And if that happens, you know what's coming next....

John, what's new. Conservatives hate regulation as much as criminals hate the law.

I understand why BofA paid top dollar (in stock) to acquire MER. They have shitloads of derivatives and want to avoid an unwinding of those derivatives. But if someone like Buffett, who has no crappy derivatives and who was wise enough to stay away from the shenanigans practiced by Wall Street, has money to invest, why would they be interested in stepping up now to prevent a melt down of the irresponsible financial companies? Their interests are better served when they stay away and pick up the pieces after many of the crappy companies hit the floor.

You would think all the bad news is priced in, but the banking index (BKX) is still trading above July lows. Clearly, there is still a lot of denial.

"Larry Kudlow on CNBC notes that there�s a ton of private equity money dying to dive in, but terrible regulatory environment doesn�t allow it"

I think Kudlow is on a constant mission to say something even more stupid than the stupidest thing he said yesterday. He's got his work cut out tomorrow.

Many of those regulations actually require outside private equity, not discourage it. AIG just got released from those requirements so they can stay afloat through more leveraging. The reason these companies have trouble getting that outside equity is because they're making bad investments. If we take those regulations away, companies making bad investments will just set up shell companies to further leverage themselves. Just like Enron did, only legal. And it seems AIG is getting a special "we'll let you do it like Enron, but without the shell companies" pass. This is getting ugly.

ROFLMAO

Geee, are the high rollin scum getting their heads handed to them ? Good.

After China & the rest of the SCO come in and clean up what sort of life do you think we all are gonna be leading ?

They set us up & now they are taking us down. Ignorant is as ignorant does.

I`ll acknowledge that people are actually serious when I see people in the streets like the late 1960s.

Think about the end of "V for Vendetta"...

How many times do you people have to "pee on the fence" before ya learn not to ?

"There are three kinds of men:
1. The ones that learn by reading.
2. The few who learn by observation.
3. The rest of them have to pee on the electric fence for themselves." - Will Rogers

I’m wondering if BofA can actually pull off the Merrill takeover when it still has only started digesting Countrywide.

Plus, what if, 20-30 years from now, BofA goes belly-up?

We can't let key institutions such as Social Security and Medicare and businesses such as Ford, GM, and Chrysler fail. The government must step in.

My plan is to sell the "m" states (Mexifornia, Mexas, Mexizona, Mexinois, and Nuevo Mexico) to China to raise a few bucks and to create a buffer between us and all the Arab terrorists who are entering the US across the Mexican border.

"AIG just got released from those requirements so they can stay afloat through more leveraging."

I should note that Bernanke is faced with a very difficult situation. I think he's handling it as well as he can. There aren't any good options, so I can't really criticize him for taking bad ones.

I am looking forward to the new ManU kit that will be available for Christmas

The most important feature of this crisis is that of firesale.

Those with enormous cash reserves have the opportunity to buy, control.

Those without cash reserves, have to borrow or sell.

Its a predatory environment primarily.

When working for an insurance underwriting subsidiary of AIG from 1977 to 1996 the ethic was to underwrite for a profit. Cash flow underwriting was anathema. Perhaps "Hank" Greenberg's role at the helm is worthy of examination. Who was it that led this organisation into the world of derivatives and other sophisticated financial products in the first place? These products have never impressed me as being anything more than a form of wagering and as any sucessful gambler knows "You don't bet any more than you can afford to loose". That adage obviously wasn't at the forefront of anybody's conciousness at 70 Pine Street in recent times. At least I can consider myself one of the lucky ones. I sold the majority of my stock holding some years ago when the price was at it's high. ot a pretty for it too. The stock certificates for the holding I have left will make interesting wallpaper in the bathroom. Nice design, quality paper, pretty blue & white (no shades of red).

When working for an insurance underwriting subsidiary of AIG from 1977 to 1996 the ethic was to underwrite for a profit. Cash flow underwriting was anathema. Perhaps "Hank" Greenberg's role at the helm is worthy of examination. Who was it that led this organisation into the world of derivatives and other sophisticated financial products in the first place? These products have never impressed me as being anything more than a form of wagering and as any sucessful gambler knows "You don't bet any more than you can afford to loose". That adage obviously wasn't at the forefront of anybody's conciousness at 70 Pine Street in recent times. At least I can consider myself one of the lucky ones. I sold the majority of my stock holding some years ago when the price was at it's high. Got a pretty penny for it too. The stock certificates for the holding I have left will make interesting wallpaper in the bathroom. Nice design, quality paper, pretty blue & white (no shades of red).

So is this Armageddon?

If so, shouldn't Warren Buffett, et al., be heading to that famous safe-haven for sinners--you know, Alaska?

The sad part about all of this is how, in the end, there will be plenty of examples of both political parties contributing to the mess (allowing both the claim it wasn't their fault). Presently, Governor Paterson (D) is allowing AIG to borrow money from it's NY insurance subsidiaries (state regulators had to make an exemption to allow this). While I'm sure he's doing this to try to save a large and important financial company headquartered in his state, AIG appears to be beyond saving. Should AIG go under after these loans are made, they will probably take with them the pension benefits, annuities and other policies a lot of ordinary people are depending on. It is the wrong thing to do even if he thinks it is for the right reason.

While the NY subsidiaries have a state guarantee fund as a backstop (financed by the insurance industry), it would probably be woefully undersized to provide full benefits in the event these subsidiaries go under.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091501213.html?hpid=topnews

"Many of those regulations actually require outside private equity, not discourage it. AIG just got released from those requirements so they can stay afloat through more leveraging"

Simply moving already printed paper across oceans is a useless endeavor. Money is merely a means of exchange. It is not wealth in itself. A nation's real material wealth is the sum total of usable goods and services it produces. The foundation of this production is the population in any given locale. Wealth is created by people and for people. America stopped being that kind of real wealth generator a long time ago.

The myth of perpetuawar has been revealed. Soon after we went into Iraq in 2003, the sub prime lending spiked, as folks assummed that it was a good time to join in the frenzy.

The cost of the war is perhaps 2 trillion dollars and I can't say we have much to show for our efforts other than a lot of pissed off people and 60+ bases all over the desert.

The bailout of Bear Stearns happened after Spitzer was outed (he was on to those creeps). Bailing out FM2 was a strange move by folks who bow to the god of capitalism, a blatant corporate
welfare handout.

Lehman was left to die.

Saving AIG may slow the meltdown of the world's markets.

It's greed folks. Speculative, predatory and ruthless greed that has caused all this.

God bush america!

An article in today's WaPo states that Lehman owes its creditors $613 billion. Lehman's assets will be sold off by a court to pay off the creditors. The assets? Well, mostly they're in the form of shaky mortgages. "No one could have anticipated" that running up over half a trillion in debt based on sub-prime mortgages might possibly have bad consequences.

How many people had to turn a blind eye to this stupidity for it to have been carried so far?

John, what's new. Conservatives hate regulation as much as criminals hate the law.

Oh, snap!

Lather. Rinse. Repeat.

Remember the AIG ad with the awkward looking kid waking his parents up to talk about his worries about their investments? Mom and Dad tell him they're with AIG, and he goes back to bed reassured.

Somebody find that kid, he needs to worry after all.