Merrill Lynch sold, Lehman Bros. Liquidating

[Balta1701]

Well, while some of us were watching the White Sox...it seems that a good chunk of the world's financial companies have vanished.

In one of the most extraordinary days in Wall Street’s history, Merrill Lynch is near an 11th-hour deal with Bank of America to avert a deepening financial crisis while another storied securities firm, Lehman Brothers, hurtled toward liquidation, according to people briefed on the deal.

 

The dramatic turn of events was prompted by the cataclysm of losses that has shaken the American financial industry over the last 14 months.

 

The moves came after a weekend of frantic negotiations between federal officials and Wall Street executives over how to avert a downward spiral in the markets. Questions still remain about how the market will react and whether other firms may still falter like A.I.G., the large insurer, and Washington Mutual, both of whose stocks fell precipitously last week.

 

Coming just a week after the government took control of mortgage lenders Fannie Mae and Freddie Mac, the magnitude of the industry’s reshaping is staggering: two of the most powerful firms on Wall Street, Merrill Lynch and Lehman, will disappear.

 

The weekend’s once unthinkable outcome came after a series of emergency meetings at the Federal Reserve building in downtown Manhattan in which the fate of Lehman hung in the balance. In the meeting Federal Reserve officials and the leaders of major financial institutions were trying to complete a plan to rescue the stricken investment bank.

AIG is currently one of the 20 largest companies in the world. It's seeking a $40 billion bailout from the Feds right now. The Fed is seemingly trying to dump money in to calm things down. Again.

 

This is actually fairly remarkable. Within a week, we've seen the GSE's nationalized and seemingly seen the next step in what appears to be a nearly complete meltdown of the financial industry.

 

There's some sort of one-liner here about the free market and limited regulation conditions doing a heck of a job.

[FlaSoxxJim]

If there's one thing the financial types around here have taught me, it's that the free market is always self-correcting and walks on water, so I'm not worried.

[whitesoxfan101]

If there's one thing the financial types around here have taught me, it's that the free market is always self-correcting and walks on water, so I'm not worried.

 

I agree, but I would think that between this and the hurricane's affect on Texas (as well as the flooding in the midwest and gas prices), it will be a very bad day for stocks tomorrow.

[bmags]

Unreal.

[StrangeSox]

Dow's down 350 pts, S &P down 50 in pre-market trading. This kind of consolidation could mean we're nearing a bottom, though.

[NorthSideSox72]

If there's one thing the financial types around here have taught me, it's that the free market is always self-correcting and walks on water, so I'm not worried.

Being one of those financial types... none of us have ever said such a thing on here that I can recall. The markets tend to self-correct for 99% of issues. The other 1% is a danger that needs to be regulated, and so does some of the 99% (because some "corrections" are a little too harsh on the economy).

 

This consolidation is probably a necessity, although, I am surprised that Merrill is among the bunch falling victim.

 

By the way, there is still another big domino to fall (at LEAST one) before we hit a bottom, especially in financials/banking: swaps. Write downs if we're lucky, numerous firms collapsing under their weight if we're unlucky.

 

[southsider2k5]

If there's one thing the financial types around here have taught me, it's that the free market is always self-correcting and walks on water, so I'm not worried.

 

Don't worry, the government will save you!

[Texsox]

Don't worry, the government will save you!

 

Will this effect a large number of citizens? Either directly or indirectly?

[Cknolls]

Dow's down 350 pts, S &P down 50 in pre-market trading. This kind of consolidation could mean we're nearing a bottom, though.

 

 

Don't fall for that. People who believe that are the same ones who think the mkt should be up because oil is down another 5 dollars. Oil going down is not positive, it reflects global deflation= not good. We should ping either the 1170 area or the 1155 area on the S&P, whether it bounces there is another story.

[Cknolls]

Remember crashes occur in oversold mkts, not overbought mkts.

[FlaSoxxJim]

Don't worry, the government will save you!

 

You know it, Brother. I'm already standing in the food stamp line.

[Rex Kickass]

Don't fall for that. People who believe that are the same ones who think the mkt should be up because oil is down another 5 dollars. Oil going down is not positive, it reflects global deflation= not good. We should ping either the 1170 area or the 1155 area on the S&P, whether it bounces there is another story.

 

Isn't oil still up 50% for the year?

[Cknolls]

Isn't oil still up 50% for the year?

 

 

Could be. I'm just saying don't think that because oil is up the DOW should be down and vice versa.

[StrangeSox]

Could be. I'm just saying don't think that because oil is up the DOW should be down and vice versa.

 

Trust me, the person I'm hearing this from doesn't think like that. He does VERY well for himself as a financial planner. Just about everything I've heard from him over the past year regarding financials (not talking about specific advice or anything, just what's going on in the market and where its going) has ended up spot-on.

Edited September 15, 2008 by StrangeSox