Wall Street Banks: The Wolf Is At The Door
This was a post that I was hoping that I would never have to write, but the wolf is at the door now and the next few days are going to be one hell of a rollercoaster. On July 16th, when PUMA and Just Say No Deal were still lobbying Superdelegates and the DNC to reconsider their selection of Barack Obama, I wrote “Economic Crossroads” where I spoke about requiring Senator Clinton’s expertise over that of Barack Obama in relation to what was happening with the sub-prime mortgage meltdown and the economy in general.
For over a year I have been watching the economy very closely, and watching the average American managing the best that they can with the cards that are being dealt on a day to day basis. We have had a sub-prime mortgage meltdown proceeding along for almost two years and watched the price of gasoline skyrocket even though Americans are using less in order to continue to feed their families.
I can already hear you saying that you do not need to be slapped silly with this kind of news, but I am getting to my point now. I mentioned in an earlier post that we are standing at the edge of an abyss. A financial maelstrom that is going to require immense fortitude, commitment, and leadership to contain and reign it in. We were heading this direction, but not as far along, when President Bill Clinton was elected and I think we all remember what happened with the deficit and the economy over the course of his eight years in the White House. Had there been another democrat elected in 2000, we may not have been standing here watching our economy suffer because of the greed of a few. A close friend, who was uncommitted in his presidential choice, asked me a year ago who I was going to vote for and why. My response? Hillary; the economy.
Now personally, I do not give a hoot if the emperor wants to run around Chicago without any clothes, but I do care about putting someone in the White House who will know HOW to RESPOND to the current crisis that is a slow moving whirlpool, but is continually picking up speed by the moment, and dragging our country and us down with it.
Everyone has their own pet issue that they like to foster and care for, but let it be known, that America is a democratic capitalist country and the barometer for its strength is not the size of it’s military, it is the condition of it’s economy; like it or not.
On March 14th, Bear Stearns turned to JP Morgan and the Fed for a rescue, July 11th, the FDIC took over control of IndyMac Bancorp; September 7th, Fannie Mae and Freddie Mac are taken over by the government, September 11th, the Lehman Brothers story started to hit the MSM and throughout the weekend there was talk about Barclays buying Lehman, but now we have Lehman filing for bankruptcy, Merrill Lynch being bought by Bank of America and AIG seeking a $40 Billion lifeline from the Fed.
In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, said it would seek bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.
The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.
But even as the fates of Lehman and Merrill hung in the balance, another crisis loomed as the insurance giant American International Group appeared to teeter. Staggered by losses stemming from the credit crisis, A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.
The stunning series of events culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to try to avoid a downward spiral in the markets stemming from a crisis of confidence.
Indeed, in a move that echoed Wall Street’s rescue of a big hedge fund a decade ago this week, 10 major banks agreed to create an emergency fund of $70 billion to $100 billion that financial institutions can use to protect themselves from the fallout of Lehman’s failure.
If we take a little walk back thru time, we find that on Monday, December 3rd, 2007, Senator Clinton proposed a 90-day moratorium on home foreclosures.
WASHINGTON (Reuters) – Democratic presidential hopeful Hillary Clinton proposed on Monday a 90-day moratorium on home foreclosures to give financially troubled borrowers time to work with lenders and avoid losing their homes.
The New York senator outlined the proposal in a letter to U.S. Treasury Secretary Henry Paulson, who is trying to broker a deal with mortgage lenders that would help troubled borrowers.
The crisis surrounding subprime mortgages extended to borrowers with spotty credit has unnerved financial markets and could deepen a slump in the U.S. housing market that some economists fear has pushed the economy close to recession.
“It is critical that we address this crisis,” Clinton said in a letter to Paulson. “The administration and the mortgage industry must reach agreement that matches the scale of the problem. If you produce an inadequate agreement, or fail outright, the cost to our economy will be incalculable.
The slow motion domino effect that Clinton was alluding to has started and is now picking up speed. This is what we may be expecting when the markets open here in the US in a few hours.
Wall Street to Plunge on Lehman Collapse
Wall Street looked set to plummet Monday after investment bank Lehman Brothers filed for bankruptcy, failing to find a buyer despite strong lobbying from the federal government.
An extremely rare Sunday afternoon Wall Street trading session, held with the intention of reducing systemic risk posed by Lehman descended into chaos, said one participant.
Organized by ISDA, the International Swaps and Derivatives Association, the session was done via a massive conference call involving dozens of firms from all over the world.
“Yelling and screaming,” occurred in the session, said one participant, with many participants unaware of the rules.
So here it is….the wolf is at the door, growling and snarling and we do not have the person who almost a year ago was foreseeing the impending financial firestorm brewing on the horizon. More than likely, we will be hearing from Senator Clinton in the next few days but what should really be concerning all Americans right now is what do John McCain and Barack Obama have to say about what is occurring right now. These two candidates need to be playing their A game right now on this issue, and with Barack Obama’s gaffe about being on the Banking Committee (when he wasn’t) and John McCain’s stupid comment about not knowing much about the economy, these two better be getting schooled. I foresee Obama blaming the Bush administration and trying to link it to McCain. I see McCain taking a more proactive approach. I could be wrong on both accounts, we will have to see.
I will be praying that the slide ends here.
Obama, McCain Weigh In on Wall St. Turmoil: As expected, McCain talks about reform and Obama blames Bush and McCain.