Friday, September 19, 2008

US Financial Markets Collapse

The World as we know it has changed
by Edmund Conway
Telegraph UK

All eyes are on the financial system, and rightly so. If its collapse continues for much longer the very real risk is that the world faces an economic slump of the likes not seen since the 1930s, with all that entails: mass unemployment, economies shrinking for years rather than mere quarters, protectionism which provokes serious geopolitical turmoil – the possibilities are so horrific it is painful even to write them.

The last time there was a comparable period of economic and financial turmoil, coupled with record inequality both within and between nations was – well, that was the 1930s.

The Securities and Exchange Commission took the dramatic step early Friday of temporarily banning the routine practice of betting against company stocks.

The move, announced on the agency's Web site, may well be unprecedented and a reflection of regulators' concern about the widening scope of the financial crisis as entreaties come from all quarters to stem a swarm of short-selling.

Monday, September 15, 2008

Wall Street awakes to 2 storied firms falling

When Wall Street woke up Monday morning, two more of its storied firms had fallen
By Joe Bel Bruno, Christopher S. Rugaber and Martin Crutsinger
AP Business Writers

When Wall Street woke up Monday morning, two more of its storied firms had fallen.

Lehman Brothers, burdened by $60 billion in soured real-estate holdings, filed a Chapter 11 bankruptcy petition in U.S. Bankruptcy Court after attempts to rescue the 158-year-old firm failed. Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.

The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.

The world's largest insurance company, American International Group Inc., also was forced into a restructuring.

And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

Ten banks -- Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS -- each agreed to provide $7 billion "to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."