"Holy Toledo!"

September 15, 2008

Money Talk: Big News On The Financial Front

Filed under: Uncategorized — Bill @ 8:48 pm
Lehman Brothers filed for bankruptcy, Bank of America (originally the Bank of Italy) buys Merrill Lynch for a song. Stocks get crushed today.

It started while we were sleeping, when the European markets tumbled. As soon as the NY Stock Exchange opened the market quickly dropped over 300 points, it came back to around -200, then this afternoon all hell broke loose. The Dow Jones ended up down over 500 points. It’s clear that our economy is not healthy.

The Lehman Bros. Co. dates back to before the Civil War, now it’s gone. 26,000 are out of work, something that will effect next months unemployment numbers. Their stock is, well, worthless.

Merrill Lynch owes over $50 billion, so they were saved by BofA, who’s stock fell on the news of the purchase. The good news is that M.L. didn’t file Chapter 11.

The mortgage market, and the greed that was built into it, has given our economy much more than a pimple. This is a full fledged bleed.

Mortgages were packaged and sold to investors wanting to earn higher than market rate interest. Financial institutions, stock brokerage firms, pension funds, and insurance companies bought these collateralized mortgage obligations. Nobody bothered to audit the qualification process, and they all assumed that real estate values would continue to grow.

Given the dot.com disaster one would think that financial institutions would have been more cautious, but no. They assumed, and we all know what happens when one assumes,

What’s the answer?
Wait, hold onto cash, and sit on your assets.

Opportunity is there if you can buy,
but who has any money?

Be careful.

P.S. And we haven’t even discussed Washington Mutual stock, which is now about $2 bucks a share.
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2 Comments »

  1. well at least our team got one.

    Comment by uncle buck — September 16, 2008 @ 9:32 am

  2. I JUST READ THAT AIGS CEO MAKES ABOUT 5 MIL MORE THAN ANY OTHER INSURANCE CEO I THINK THERE IS A LOT OF GREED & CORRUPTION THERE.

    Comment by uncle buck — September 17, 2008 @ 11:15 am


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