Financial Crisis Worsens As Investors Panic

New York Times:

The financial crisis entered a potentially dangerous new phase on Wednesday when many credit markets stopped working normally as investors around the world frantically moved their money into the safest investments, like Treasury bills.

As a result, the cost of borrowing soared for many companies, while the stocks of Wall Street firms like Goldman Sachs and Morgan Stanley that only a couple of weeks ago were considered relatively strong came under assault by waves of selling. Investors were so worried that they snapped up three-month Treasury bills with virtually no yield and they pushed gold to its biggest one-day gain in nearly 10 years. Stocks fell by nearly 5 percent in New York.

Read the whole story: New York Times

Comments

[Wingit]

They reinstated the no naked short sale rule, but they have NOT reinstated the uptick rule, so the short sellers can just reinforce the downtrend of this market. The rule used to be that before your short sale could be processed the stock would have to make an uptick (up a fraction). Without that rule the short sellers can just pile on and make a bad situation worse and a lot of money for themselves. Even in these bad times the administration still wants to take care of its wall street buddies. McBush doesn't even undertand that process. All he can do is toss out his favorite meaningless word "reform". It is meaningless beause he never explains HOW he is going to reform whatever he is going to reform.

[sonoffestus]

I was once told that because I was a small businessowner I "HAD" to be a republican.
Yeah right! The conservative agenda does not help the small buiness owner. The most difficult years I have ever experienced as a small business owner have been when there has been a republican in the WH . Hey guess what........... it' happening again.

REPUBLICANS MISLEADING AND BLEEDING AMERICA, It is what they do best!

Funny, I moved my business to Canada, I pay higher taxes, work less and make more money. That is the truth. Oh, and we have excellent healthcare here in BC at $48.00 per month. Yes, there are problems, but please do not tell me there are not problems in the US. I experienced more problems with the US system than here, and I was paying $700.00 per month three years ago. No place is perfect, but sorry folks, you are getting hosed! OBAMA/BIDEN !

[GerryS]

the dow is trending down today. will it close negative? very possible-

[Tom95134]

This is more worry some that the DOW, "...entered a potentially dangerous new phase on Wednesday when many credit markets stopped working..."

Bloomberg reported overnight that some banks have started hoarding money. Think of it this way. Not many people keep a lot of cash on hand because they have become dependent on their ATM. This has worked very well for the banks because it made funds available for overnight lending since interbank transfers were easily handled. If the the ability to move money between banks and the flow of cash, real cash not just the numbers, has a problem you will see people drawing money out of banks in large amounts and putting it in the mattress.

[Wingit]

The dow is up right now. It will be down tomorrow, since no one is sure what Bernake will do over the weekend, his favorite time to make changes. You can't go by daily swings in the market. A chart will show a slight uptick within a market that is in an overall slide. There is no technical support line for the markets at this time, so there is no light on where the bottom may be.

[WorkingClass]

I'm a freeking janitor and I SAW THIS COMING a long time ago. Lots and lots and lots and lots of people saw this coming. I learned about it from them, on the internet. Most Americans, sadly, don't believe anything unless they see it on teevee. Well - the teevee didn't WANT you to know the truth. From now on I wear my tinfoil hat everywhere I go. Its a badge of honor.

[WIpatriot]

Welcome to the club, WC.

[FreedomCorpse]

Yep, WorkingClass... me too. Lyndon LaRouche was screaming bloody murder on his executive intelligence review website when Bush fired the director of the Office of Federal Housing Enterprise Oversight a day after Armando Falcon issued a warning of systemic crisis in 2003. Five years ago they were warned and they punished the messenger instead of doing something about it.

[sammyscout]

For mezzi1962 and other m0rons who decided this too was a partisan fault whichever way you lean, we've been complicit in digging the hole with the govt for a while now (20 years). All those creit cards and $2000/day contract killers by Blackwater, well, who dya think was gonna pay for that? Cheney went from net worth $2mil to $200mil in the first 4 years. How about this....

The decision was a remarkable turnaround by the Bush administration and Mr. Paulson, who had flatly refused over the weekend to risk taxpayer money to prevent the collapse of Lehman Brothers or the distressed sale of Merrill Lynch to Bank of America. Earlier this year, the government bailed out another investment bank, Bear Stearns, by engineering a sale to JPMorgan Chase that left taxpayers on the hook for up to $29 billion of bad investments by Bear Stearns. The government hoped at the time that this unusual step would both calm markets and lead to a recovery by the financial system. But critics warned at the time that it would only encourage others to seek bailouts, and the eventual costs to the government would be staggering. (The New York Times. 9/16/2008)

[GhiaccioPronto]

Yeltsinists RULING AMERICA

[The Hedonistic Pleasureseeker]

It is kind of appalling, embarrassing and just plain sad to see people blaming "capitalism" for our country's ills. Do these people even know what capitalism IS?

Central control in the hands of a handful of moneyed elites is COMMUNISM or CORPORATISM. Far from being polar opposites they are different words meaning essentially the same things: Basically "Bend over, they'll drive."Central banking and economies fueled upon debt are THE two major planks of the Communist Manifesto. Production in the hands of "The State" is communism. The Fed just marching in and making decisions that belong to CONGRESS (you and me) is communist/corporatist/fascist. It's neoFEUDALISM.

Capitalism the way it was envisioned by the Founding Fathers, who honored the INDIVIDUAL and considered central banking and fiat currencies anathema, HAS NOT EXISTED since . . . oh, the New Deal perhaps, maybe even before that. 1913, when central banking came into being.

Repeat: We haven't had capitalism in this country for a century. Maybe you'll see real capitalism at your local garage sales when all the unemployed people start unloading all their worldly goods. Start paying attention! All the essays vilifying greedy-capitalism restlessly while they merely depict the deep flaws inherent to the centralization of power - aka the Socialist Ideal - are very instructive, but not the way that their authors imagine. WAKE UP. Our coroporatist overlords are offering up socialism to "cure" the ills that socialism caused. You've been had.

[mezz1962a]

Too bad Barny Frank was not actually doing his job for the past 2 years maybe we could have avoided the Fannie and Freddy mess since he was the oversight chairman.

Maybe if Fannie and Freddy did not give $400,000 to the Obama campaign they would not have run short.

Too bad Obama knew nothing considering the ex CEO of Fannie was heading his VP search commitie and is a trusted economic adviser.

Obama and the Dems controlled congress and for the past 2 years the only thing they did was accept money for their campaigns to look the other way while the market was collapsing

[almoguy]

I will bet that you cheated at Monopoly as a kid!

[MilwaukeeDan]

mezz, right, let's make this a partizan issue, it's all that gay guy Franks fault. To get informed, you might want to read sundialsvc4 bellow, the economic problems in this country started long ago and you can blame both parties for it. Also, ask yourself, why does the most powerfull and wealthiest country on earth(as Americans claim) need third world slave labor to keep its economy going?

[GhiaccioPronto]

legal nihilism and state sponsored kleptocracy

[Erdgeist]

It is telling that SEC Commissioner Christopher Cox has put an emergency halt to "naked short selling" which supposedly was outlawed by the SEC in 2005 that prevents selling a stock short before first borrowing it. It is also telling that SEC removed the uptick rule put into place by Joe Kennedy when he was the SEC chairman which prevents sellers from selling short when a stock is going down. His failure to reimpose the uptick rule is frankly, outrageous, in light of what just happened to Wall Street.

It is fair to say that the cause of the abuse of naked short selling that led to AIG's demise not to mention other financial companies, was precipitated by deregulation and the lax oversight by SEC Commissioner Cox. Cox, a Republican, doesn't understand that financial markets are not run by the invisible hand of God but by strictly enforced rules learned from previous market collapses.

If Wall Street needs a scapegoat it can be found in both deregulation and Cox. SEC Commissioner Cox essentially didn't close the barn door completely. Now he wants to close and lock the barn door, and it may be too late. Its the old saw of "he's a day late and a dollar short."

Bottom line: SEC Commissioner Christopher Cox's conduct needs to be investigated by the Senate.

[BethStuart]

I noticed several republican congressmen and senators complained bitterly about the AIG bailout. Apparently, the Bush administration didn't discuss it with anyone but simply informed them it was going to take place just before it did.

[Triangle1]

I'm looking around the world, and it appears to be moving forward the same as usual. Same websites. Same stores outside. Same people. Same gas guzzling cars. Huffington Post blowing this into a major event for political purposes. Like a community organizer is somehow going to make a big difference? Like McCain is the source of these problems? Let's blame Palin, I'm sure this all started in Alaska? Like the Democratic controlled Senate and House are submissively laying back, doing nothing because they simply cannot? http://mespace.wordpress.com

[martinchill]

yeah - huffington post is trumping up this whole 'stock market crash' thing.

it's not the result of eight years of deregulation.

one wonders how you can type with your head buried in the sand.

[Smirk]

Perhaps you have a word with the raging leftists at The Wall Street Journal. They seem to think that recent events involving Lehman Brothers, Merrill Lynch, AIG, WaMu and Wachovia are rather significant. Oddly enough, so do financial analyists in Russia, Germany, and Japan, but hey, what do they know?

[Mogamboguru]

German bank KfW is considering to sue Lehman Brothers for the return of 600 million Euros (900 million Dollars) which they invested in Lehman shortley before they went belly up. Claim is, that Lehman, with criminal intentions, veiled their real economic situation and tricked KfW into investing.

And this may only be the tip of the iceberg. There are d.e.a.d.-sure other banks and investors, too, who have been tricked by Lehman and others during the past, frantic days of trying to keep their banks alive.

Folks, this is going to be REALLY ugly, real soon.

[Mogamboguru]

Hi, tro//. Nice try. And now go back to feed your guinea-p.i.g..

[FreedomCorpse]

Finish your kool-aid now and be a good boy.

[SCG]

"It's Like A Fire In A Cinema" "You Are Rushing To The Door Because Everyone Is Rushing To The Door"

Don't they want to stay, and watch the Republican credits roll by?

[martinchill]

lol

[Sundialsvc4]

This financial crisis really began way back in the 1960's, when "war itself" suddenly became the hottest business opportunity coming-and-going. And there was a stupendous amount of money available to pay for it... unfortunately, every scrap of it was "borrowed."

"Brain-Wave Binoculars" (no kidding...) are the order of the day in the "defense" (sic...) world, and "The Full Faith And Credit Of The United States (tm)" pays for All.

Today, the Federal Government "borrows" more than $1 million a minute, 24/7/365. We don't like to think of this in the same way as those days in post-WW1 Germany when it was cheaper to burn currency as stove-fuel than to try to buy fuel with it, but really it's the selfsame thing.

"Ike" Eisenhower saw it all coming. As a five(!)-star General before becoming President, he saw the unprecedented threat and he warned us. But we did not listen.

The music has stopped. And in the eerie silence, there is now hell to pay.

[SCG]

Your onto something, it was the time of Ayn Rand and war.

[MilwaukeeDan]

Sundial, you're always a great read, well stated.

[deliriousgod]

its not enough. the world is sick of this. twenty-odd years of Savings and Loan, Junkbonds, Worldcom, Enron, now all this and the collosal presumptuous arrogance of America as it debates whether it is a great nation or the greatest nation ever are just too much to stomach. People want to hear that it will not stand, the people who did it will not retire to islands, heads are going to roll in the street and ITS NOT GOING TO HAPPEN AGAIN!

[WorkingClass]

Hear hear. NOW your talking.

[darthdarcy]

No it's more like rats deserting a sinking ship that they ate through the hull of..!

That's what it's like..!