Meltdown Monday for banks

Meltdown Monday for banks

Within the past 24 hours, two of the world’s biggest investment banks have been destroyed – Lehman Brothers filed bankruptcy, while Merrill Lynch was rescued by Bank of America.

The Fed extended emergency lines of credit; Wall St banks set up a $70 billion liqiudity fund.

And global insurance super giant AIG suddenly threatened to implode.

Today was an extraordinary day of trading on worldwide stock markets. But it could have been worse.

The Dow Jones lost over 504 points, dropping to 10,917 – a loss of 4.42%, the worst day trading on Wall St since 2002.

The FTSE 100 lost over 200 points, dropping 3.92% on the day’s session. However, it lost almost 4.5% by Midday before rallying from 5124 points to 5204.

Thank goodness some of Asia’s biggest stock exchanges were closed for the day, otherwise the carnage could have been bigger.

The Telegraph called today’s events “Meltdown Monday”.

As did the BBC’s Robert Preston, referring to it as “the most extraordinary 24 hours” he’s ever seen in 25 years of financial reporting.

The Times, being traditional, simply called it a “Black Monday”.

The FT was more introspective, chronicling the fall of Lehman Brothers as a “tragedy of hubris and Nemesis”.

Meanwhile Marketwatch claims that fund managers passed the day unconcerned, a report echoed on Bloomberg TV by Marc Faber and Mark Mobius.

Meanwhile, investors face bear markets in all sectors, and the threat of global recession grows daily.

Tuesday trading is unlikely to offer much cheer through the gloom.

Freddie and Fannae were nationalised last week, Lehman went bust at the weekend, and now AIG is haemorrhaging.

Investors are already looking for the next big banking failure, and Washington Mutual and Wachovia are very much in their targets.

As world markets open tomorrow, investors are likely to be unforgiving.

With no sign of positive economic news expected until at least Easter 2009, the markets truly belong to the bears.


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