jump to navigation

US faces global funding crisis, warns Merrill Lynch (May Fail?) September 23, 2008

Posted by frewon9 in News.
Tags: ,
trackback
Merrill Lynch

Merrill Lynch

To lose one major investment bank in the course of a weekend, to paraphrase Oscar Wilde, might be considered a misfortune. To lose two looks dangerously like a catastrophe.

By Sunday night, after a tumultuous weekend of round-the-clock negotiations orchestrated by the US Federal Reserve and the Treasury, it looked likely that Lehman Brothers and Merrill Lynch, two of America’s most famous financial names, would cease to operate as independent institutions at the opening of business this morning.

That would mean Wall Street may have just had its most extraordinary weekend in at least the last 50 years, with the worry that even worse may still be to come.

How did we get here? There are two answers to this basic question

The immediate explanation is that the US government decided that it simply could not afford – in the interests of prudential supervision – to rescue yet another bank. Someone had to be shown to be not too big to fail, and it looks like it was Lehman.

In March, the Federal Reserve helped JP Morgan acquire Bear Stearns, a controversial decision that could cost the authorities almost $30bn. The Fed defended the move as essential to saving the whole US financial system from going down.

But having dipped its hands in the blood of the financial markets the Fed decided it simply could not do so again without in effect committing itself to a completely open-ended guarantee of every financial institution that found itself in trouble.

The second, deeper explanation, is that this is merely the most dramatic symptom yet of the disease that continues to ravage the US financial system.

The balance sheets of too many US banks are awash in toxic assets. Most of them can be traced back to wildly negligent investment decisions made during the boom in house prices and other assets in the last five years. In the last eighteen months US house prices have fallen by more than at any time in the last 70 years and a whole host of assets that were backed by that market have become worthless.

This may be more than just another catastrophic end to another financial cycle, however. It could be the end of a whole financial model – investment banking itself.

“It’s probably no exaggeration to say we are witnessing the end of an era’ said one seasoned financial executive watching events unfold at the weekend.

Advertisements

Comments»

1. bird exterminator - August 8, 2012

Hi,

I am on your page , somewhat since I’m fascinated in your theme clearly nevertheless plus for the reason that I’m in the
process of figuring out English as a 3rd tongue and was advised during my seminar to pay a quick visit boards and pages in order to go through writing done and “fit” sentences.

I have to divulge that to start with, selecting
your site was rather a chance , plainly for the reason
that I was interested by your title but My group is
writing you as you really together prompted and confused me…

Kindly do not be bothered by this as I really don’t propose to be distasteful in any way yet I diverge with your 5th point (fourth paragraph) and in reality, as far as I appreciate your content, you do as well 3 lines below!

Aside from what I pointed out precedingly , everything you put in writing feels wholly satisfactory to me and makes accurate sense, which is why I’m so mystified.

It’s likely I’m truly not very comprehending what you in reality stand for to put across by way
of your composing .

So far as your site itself is concerned, I especially
appreciate how relaxed you made your navigation and how effortlessly your articles is read (variety of
colors for content and background, dimension of characters …)
I appreciate the way you put in writing, which I mignt portray as being fixed, accomplished however
not using many expressions (I believe the expression is concise?
).

I have bookmarked your page and most definitely will
come back before long to check what new stuff
you wrote .

Xue .

PS would it bother you if I linked to your web blog from mine as we communicate alike allegations in different languages (mine is in Japanese ).

2. cheap weed grinders sale - January 25, 2013

I loved as much as you will receive carried out right here.
The sketch is tasteful, your authored subject matter stylish.
nonetheless, you command get got an impatience over that you wish be
delivering the following. unwell unquestionably come more formerly
again since exactly the same nearly very often inside case you
shield this hike.

3. Pat Sasseville - February 24, 2013

Excellent post. I was checking continuously this blog and I am impressed!
Extremely helpful information specially the
last part 🙂 I care for such information much. I was looking for this particular
information for a long time. Thank you and best of luck.

4. review toaster ovens convection - March 30, 2013

The sun’s energy can be used many points, this kind of which causes your home your electricity. Ok, enough fooling, since It’s
safe to attained the particular oven gathered together, I believed I’d personally experiment with the program, and also to my big shock to anyone of which worked! Seriously smoked generous chicken wings on them prior and they also end up satisfying. That is most certainly fine, while what the hell do i need to make the girl?!Throughout Just fine, consider examining an array of sought after individualized items for many would-be brides… In cases where vitamins and minerals accumulation interior steamer, features medical problems, as well as having up to always end up cleaned, definitely product. Pay a visit to consider, aquiring a convection microwave of which integrates in with your kitchen could make you feel better along with.

5. delonghi stainless steel toasters - April 3, 2013

Since that time, There are a new newbie know-how your oven,
compared to welcomed in the main snapshot prior, that’s inspired us a so that it will considerably improvement my head. Take a look at electric plug’s blend to guarantee it
easily has not solely offered. Be sure that you bond your main floorboards liberally via trade magazines as the drippings does indeed
seep right out the oven crate door while run down the skin with the cookware.
It is now versatile.

6. skyrim keygens - April 5, 2013

I do consider all of the concepts you’ve introduced on your post. They’re very convincing and can certainly work.
Nonetheless, the posts are too brief for beginners.

Could you please prolong them a bit from subsequent time?

Thanks for the post.

7. seo - April 10, 2013

It’s actually a nice and useful piece of information. I’m glad that
you shared this useful information with us. Please keep us up to date like this.
Thank you for sharing.

8. Nyc Hobbies - April 11, 2013

Wow! In the end I got a blog from where I be capable of actually get helpful facts concerning my study and knowledge.

9. Merchant Cash Advance - April 13, 2013

Yes! Finally something about Loan.

10. chiropractors - April 16, 2013

I am sure this article has touched all the internet users, its really really fastidious paragraph on building up new webpage.

11. merchant cash advance - May 11, 2013

I have been surfing on-line more than three hours lately, yet I by no means
found any interesting article like yours. It is pretty value sufficient for me.
In my opinion, if all web owners and bloggers made excellent content material as you probably did,
the web will probably be a lot more helpful than ever before.

12. Tory - May 11, 2013

Everything is very open with a precise explanation of the issues.
It was definitely informative. Your site is useful. Thanks for sharing!

13. merchant cash Advances - May 11, 2013

Wonderful beat ! I would like to apprentice while you amend your website, how could
i subscribe for a blog web site? The account helped me a
acceptable deal. I had been tiny bit acquainted of this your
broadcast offered bright clear idea

14. 1st Merchant Funding - July 10, 2013

I like the valuable info you provide in your articles.
I’ll bookmark your blog and check again here regularly. I am quite certain I’ll learn
many new stuff right here! Best of luck for the next!

15. takecharge small business loans fast - July 22, 2013

Thanks for a marvelous posting! I seriously enjoyed reading it, you
might be a great author. I will be sure to bookmark your blog
and will come back at some point. I want to encourage continue your great job, have a nice afternoon!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: