Stocks in India also plunged Monday amid anxiety about the global financial system. Outside the Bombay Stock Exchange, an onlooker watched a screen showing the movement of stock prices. Photo: Gautam Singh/Associated Press
The Rundown…
There’s a lot to swallow, coming off a weekend that saw the nation’s housing-mortgage-credit crunch roll over some of the nation’s biggest financial firms. Lehman Brothers filed for bankruptcy, Merrill Lynch agreed to sell itself (at fire-sale prices) to Bank of America and insurance monolith American International Group (AIG) scrambled to find enough cash to stay in business. Why? The short answer is that any company that got itself involved in buying, packaging, trading and selling bad mortgage loans and their spinoffs is now paying the price. [source]
The Impact…
The convulsions in the U.S. financial system sent markets across the globe tumbling, as two of Wall Street’s biggest firms looked set to exit the scene and insurance titan American International Group Inc. turned to the Federal Reserve and the state of New York for assistance. The U.S. stock market suffered its worst daily point plunge since the first day of trading after the Sept. 11, 2001, terrorist attacks. [source]
In Japan…
Japan’s Nikkei slid 5.1 percent to a three-year low on Tuesday as investors dumped shares following the collapse of Lehman Brothers (NYSE:LEH) and turmoil on Wall Street, as other U.S. financial firms fought to survive. [source]
Asia…
South Korean shares shed 6.2% and Hong Kong’s Hang Seng index fell 6.4%. Markets in Shanghai, Taipei and Singapore were also sharply down, and the pattern was repeated in Australia and New Zealand, although the falls were smaller.
Europe…
Stock markets in Europe plummeted on Monday as Lehman’s failure raised fears about the strength of the global financial system. Banking shares were hardest hit.
Brokers in Frankfurt watched as Germany’s stock exchange went down 4.6 percent after the American investment banking giant Lehman Brothers filed for bankruptcy and Merrill Lynch agreed to be taken over by Bank of America. Photo: Thomas Lohnes/Agence France-Presse
Everywhere…
Oil prices closed below $100 a barrel for the first time in six months Monday, tumbling in another dramatic sell-off as the demise of Lehman Brothers and the sale of Merrill Lynch deepened worries about the U.S. economy. Crude prices shed more than $5 a barrel and have now given up virtually all their gains for the year, extending a steep, two-month slide from record levels above $147 a barrel. [source]
Linguistics…
The credit crunch has become such a major issue for households that it has entered into the official lexicon. The latest edition of the Concise Oxford English Dictionary carries a definition of crunch as “a severe shortage of money or credit”. [source]
The Expert…
“Let’s recognize that this is a once-in-a-half-century, probably once-in-a-century type of event.” – Alan Greenspan
Me…
Now I don’t want to incite panic or anything but if anyone needs me, I’ll be out buying canned goods for the bunker.
Where is your bunker and do you have a stockpile of weapons as well? We’re going to have to defend ourselves when the zombies come.
What is this credit crunch thing I keep hearing about? Does it mean my credit card won’t work? Teehee. Is there room for the Beans in your bunker? We could pay… not much, but we could pay.
I would say now’s a good time to start investing in the market…an idea I’ve been entertaining for some time now.
asoom, analyists were saying just a few weeks ago that the worst has come and things will start getting better. Today nobody is saying the worst has come, so keep your money under the pillow or just do like me, waste it as long as you’re alive
great post! was looking for something to cover most aspects about this issue.
well this where the system defeated its self , the mortgage companies a few years ago when they started this mess in the united states , they meant to make money using the Capitalism as a weapon , this is not the only news behind it , we have to understand that the Lehman Brothers is a century old Jewish bank in the USA , the question is since the US government lifted two of the biggest real estate companies and bought them when they were falling , why Leham’s Brothers were left out , Merrilanch was also bought by the Bank of America , ,
yesterday Cox says
” Lehman Brothers bankruptcy agent ” said , in this part of the world success will be rewarded and Failure will be punished.
This wasn’t true when the US Gov. bought Fredric May and Merrilynch and other companies.
when such a big Bank files for bankruptcy we are looking at a system that is falling down , can you imagine that all the banks sector in the world was effected , all the stocks were hit down in whole numbers of percentages , this time the whole world was effected and there is no Europe to save the USA as in 9/11 , so the world is moving into a September crises again. interesting what the US army will be fighting now. this is not a terrorist attack. but the Question remains why didn’t the US gov. lift Lehman’s Brothers??
MommaBean : the Credit crunch is as Nas wrote on the post “a severe shortage of money or credit†this happened when the mortgage companies in the Untied states were selling loans for real estate property to the citizens , usually as all banks do , there is an equation that will fit for any amount of money taken as loans , so they get the loan done , and sell it for the bank taking their commission, the banks discovered that the loaners were not qualified by to pay for the loan , so the banks immateriality would take the real estate , this happening too many times all around the USA made the credit crunch . there is no money in the banks , The US financial department tried to solve the problem they made it worse .
The Petroleum prices , banks , market indicators , buy buy buy this is a good chance to make money
Great round up Nas! For me it’s been fascinating following the news in New York. I was talking to a school bus driver in a tiny neighborhood in Brooklyn the other day and the minute I said the word economy he went off on a long rant about the failure of the banking system and how the entire nation is in debt thanks to credit…
it feels like so much more will keep unfolding over the next weeks and it’s hard to anticipate how this wall street crisis will affect the world economy for years to come.