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I don't mean to overwhelm you with posts, but...
It's hard not to report this:
$$$ On CNBC they are saying that AIG has asked the Federal Reserve for some kind of emergency bridge loans. Can the Fed lend to an insurance company?
$$$ Federal Reserve is dramatically expanding its emergency lending program. It's now going to take all sorts of collateral, including equity.
$$$ "Take a very deep breath. It looks almost certain that this week will be the one where we see the financial implosion in U.S. banking and brokerage that many have been expecting for some time," Paul Kedrosky says.
$$$ With Merrill Lynch, Lehman Brothers and Bear Stearns gone, everyone is asking whether Morgan Stanley and Goldman Sachs will survive as independent investment banks.
Addendum: Here are Dow futures, at 10:21 p.m. down about 300 points. All things considered that counts as good news.
Posted by Tyler Cowen on September 14, 2008 at 09:43 PM in Current Affairs | Permalink
Comments
but alex said this housing thing was no big deal
Posted by: anon at Sep 14, 2008 9:59:20 PM
Take a very deep breath. It looks almost certain that this week will be the one where we see the financial implosion in U.S. banking and brokerage that many have been expecting for some time. It reminds me a little of that awful feeling you have when you think you're going to vomit, but hold off for a surprisingly long time, knowing how dreadful the experience is going to be -- only to have nausea overwhelm you and be finally forced to say "f**k it" and hurl.
Posted by: at Sep 14, 2008 10:18:33 PM
AIG's insurance companies are just fine. The problem is AIG's subsidiary that sells derivatives, which I imagine is eligible for taxpayer-funded bailouts...I mean loans.
Posted by: DougM at Sep 14, 2008 10:20:34 PM
The Ponzi scheme is collapsing before our eyes tonight. This is the inevitable outcome, just a sorry sight to see, isn't it? Washington Mutual, Wachovia, and others are sure to fall within the next few weeks. Then will follow BofA, Citi, and JPMorgan within the year.
Posted by: Yancey Ward at Sep 14, 2008 10:20:39 PM
Apparently, someone has destroyed very creatively.
Posted by: adina at Sep 14, 2008 10:27:03 PM
Only 300? I agree it's good news.
How much can the US govt absorb?
Posted by: Bernard Yomtov at Sep 14, 2008 10:29:11 PM
Here's what concerns me: BofA couldn't possibly have dug deep enough into Merrill Lynch's books to determine this was a wise purchase. There are still many unknowns that they just agreed to acquire. Even worse, they did so with $44B of stock. No cash. Nothing real; just play money.
All the banking cartel has done is buy itself some time; we have made no gains of stability.
Posted by: djconnor at Sep 14, 2008 10:44:15 PM
I just wonder who was heavily short Merrill Lynch at the end of Friday, and who was short Bank of America? Were they largely the same people, or were the groups significantly different? Cui bono?
Posted by: Yancey Ward at Sep 14, 2008 10:53:49 PM
I'm waiting for a Volcker-type to step in. Will BSB serve out his full term? Then again, Luskin in today's WaPo sys that things are not all that bad, by historical standards.
Posted by: anon2 at Sep 14, 2008 11:04:31 PM
Will this wave of credit snobbery never end?
Posted by: Kieran at Sep 14, 2008 11:20:27 PM
anon2,
Luskin is heartily mocked here.
Posted by: at Sep 14, 2008 11:58:58 PM
Why did a post that was here earlier today that mentioned this situation disappear?. Seemed a pretty uncontroversial post to me, so I was wondering what happened to it.
Posted by: RW Rogers at Sep 15, 2008 12:26:53 AM
Considering that Merrill was bought at a premium, I could guess that you're looking at the wrong group, Yancey.
Posted by: anglo-burgundian at Sep 15, 2008 4:58:58 AM
Why is Ron Paul dismissed as a crook or ignored? He's the only politician that has an understanding of the process of wealth creation that is often called economics. This process is inhibited by systems such as the federal reserve, all kinds of fancy regulation and evasive maneuvers, and by high taxing and wasteful spending.
People are biased towards the status quo. Luckily for us, the status quo is collapsing as we speak. I suppose Mr Bernanke should rewrite his introductory Macroeconomics book.
What a sham. Cling to your guns and laugh all the way to your armory and shrine as Obama's experts figure this one out.
Posted by: pro privo at Sep 15, 2008 5:42:44 AM
I took away the other post just to clear room for others. There was nothing incorrect about it. It dealt with the sale of Lehman domain names on eBay.
Posted by: Tyler Cowen at Sep 15, 2008 6:09:40 AM
Would someone do a citizen's arrest of the criminal little Greenspan already?
Posted by: Bill Stepp at Sep 15, 2008 7:05:33 AM
Pro Privo:
Dr. Paul isn't dismissed as a crook. He's dismissed as a kook.
One reason is that he calls for the elimination of the Fed and most government regulation. Aside from the fact that, you know, we tried that before, and things weren't so good, I for one do not like excessive rat feces in my cereal, with is one of the things our government regulates. Or used to, before Bush II.
.
Posted by: MFA at Sep 15, 2008 10:33:41 AM
I for one do not like excessive rat feces in my cereal, with is one of the things our government regulates. Or used to, before Bush II.
Oooh, is that legal now? I'm gonna buy up Kellogs and start selling rat feces flavored cereal! That, my dear, is a profit opportunity waiting to be snatched!!
Posted by: liberty at Sep 15, 2008 10:59:22 AM
Tyler, at moments like this, the more posts the better. Please don't try to restrain yourself at such a time. Anything that pops into your head to post, just do it!!
Thanks.
Posted by: Kent at Sep 15, 2008 12:37:04 PM
I agree with Kent! I wanted to check-up on the progress of those eBay listings later last night and couldn't find the post with the link, and then couldn't find the eBay listings when I went direct to eBay (although someone was offering to sell Lehman for a penny shy of $100 million). That's why I asked: I was secure in being lazy and not bookmarking the listings and then you quit rescuing me from my folly.
Posted by: RW Rogers at Sep 15, 2008 1:21:21 PM
I think the problem might be that our host realizes that the only fundamentally sound response to these events is a call for abolishment of fractional reserve banking and the accompanying regulatory cat and mouse game of a shadow banking system backed by government guarantees and carried along the whimsical currents of fiat-greenbacks. But this opinion is too much of a marginalized fringe position; perhaps TC is debating internally whether to truly start the marginal revolution. He has credibility in the mainstream, so who knows what might happen if he writes about it in the NYT.
Posted by: pro privo at Sep 15, 2008 5:40:02 PM
I'm still hiding under my sheets for fear of Avian Flu.
Now that "total fiscal meltdown" is revealed to equate to a 4% loss in global equity markets, I'm sure the doomsday prophets will forget they ever claimed anything different and move on to another hot topic...
Posted by: Paul N at Sep 15, 2008 8:46:14 PM
