The Collapse
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Bear Stearns.
Fannie Mae & Freddie Mac.
And now?
Lehman Brothers (and Merrill Lynch).
Wall Street was scrambling last night to avoid a dramatic deepening of the financial crisis afflicting world markets. The investment bank Lehman Brothers was edging toward bankruptcy after an apparent failure in talks to save the business, while Bank of America began discussions to buy another troubled Wall Street firm, Merrill Lynch.
Barclays pulled out of a rescue takeover of Lehman after 72 hours of discussions led by US authorities anxious to avoid the firm going bust.
Bank of America had also been in talks to acquire Lehman but has instead turned its attention to Merrill Lynch, which many feared could be the next victim of the credit crunch. A deal would be in the order of $40bn.
The American International Group, the insurance company, is planning a major reorganization and a sale of its aircraft leasing business and other units to stabilize its finances, a person briefed on the company’s strategy said on Sunday.
A.I.G. became one of the focuses at an emergency gathering of Wall Street executives over the weekend, and was trying to arrange a capital infusion in the face of possible credit downgrades.
Who’s got next?
UPDATE: Lehman is going to declare bankruptcy.
UPDATE 2: Bank of America is buying Merrill Lynch for $44 billion, 2/3 of its previous value.
In light of some of the dumber comments posted here and I’m sure all over, here is how that noted bastion of liberalism, the Rupert Murdoch owned Wall Street Journal, sees the story.
54 Responses to “The Collapse”
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© 2000-2011 Oliver Willis
It’s a 2-fer, at least. Merrill is toast as well. And AIG and WAMU are waiting in the wings. Greenie and the Republican Party are on the hook for the largest meltdown since ’29. Everyone should read Roubini.
“OMG! I hope there’s a financial collapse , so Obama can win the Election!
Please, please, please!
Because, otherwise , he has no chance!
Bwa – ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha -ha – ha !!
It’s too late, Frank. The collapse is ongoing.
Tell me, is it hard work being such a tremendous douchebag? It must be exhausting for you.
“we’ll be raptured before the deregulation we wanted destroys the country”-repubs
I am sorry, Mambo! It has to be upsetting to watch the One turn out to be just another guy who loses to a Republican, because he is trying to sell the same Bill of Goods that the Democrats have been selling since 1964..
The only two Democrats who have entered the White House since then , have only done so, by pretending not to be liberals .
Do you need a house to fall on you before you figure that out?
Frank DiSalle: It has to be upsetting to watch the One…
Please point out to me any post someone, anyone on the left has made here where they’ve actually referred to Obama as “the One”.
It seems to be something only used by right wingers such as yourself who need to set up strawmen to have any semblance of actually making any reasonable argument.
Make a legitimate argument against Obama and I will listen, and actually seriously consider your points. But you have to make a legitimate argument first.
Frank you’re a fucking idiot. I swear. There are conservatives and idiots and you are the perfect synthesis of the two. Our financial system is in serious trouble – anyone with a brain can see this. I didn’t write a thing in this post about politics, and while I believe some of it is due to a lack of government oversight of big business that never comes up when the government bails these guys out, the fact remains that major banks and mortgage companies going under in such close proximity is bad news.
Could you offer some sort of observation about this? No, you just fucking hit your “The One” macro and spewed the usual bull you always spill. I don’t care if you’re to the right of Atilla The Hun, but Jesus do you have to be such an asshole?
No, you don’t. You choose this path.
NeoCon Socialism: Privatize profits, socialize losses.
This makes me so, so, so mad. I want to see some CEO’s caned and flogged on the steps of the Capitol.
“The One” is the number of original ideas the McCainiacs have left. Well, that, and trying to figure out if they can make The Early Bird Special even earlier in time for Matlock reruns.
Frankie, let me ask you something? Why do you support an ideology that has lead to this? Why do you support the criminalization of homosexuality? Why do you support socialized vengeance? Why do you support tax cuts during a war, which no other president has ever thought was a good idea. Why do you support torture for shits and giggles? Why do you support all the shit that has happened in the past 8 years? Why do you see this, and then say to yourself “4 more years”?
I will grant you that if McCain wins, America will get the government it deserves, but it’s not the one I deserve.
So much for Johnny Mac’s bounce.
It has to be upsetting to watch the One turn out to be just another guy who loses to a Republican
Seriously, Frank, isn’t it a little early to be counting chickens?
Yeesh. This is really bad news.
Yeah, Oliver, you got that right. What the hell, Frank ignored what could be the worse thing that ever hit Republicans….another Great Depression. I don’t want it, you don’t want it, he doesn’t want it (I hope.) but the highly levered unregulated markets are doing it again and we’ll all suffer.
Obama needs to step up and shout it out how Republicans in their ignorance of history and human nature have orchestrated this train wreck with hubris, greed and unconcern for the average working person.
30 years ago there was a book called “Looking out for Number One” and I’ve seen that book on the shelves of insurance men, 401 K brokers, and other culture warriors of the right. They also followed the motto of “socialize costs, privatize profits” and thus here we are.
I am not sure if Obama wants the job. Really, McCain probably will institute martial law if we protest the coming poverty and malaise….Jimmy Carter’s days will look like a Golden Era in comparison.
Let us hope that the worse of the doomsayers are wrong…but I’ve got a feeling it’s a slow evolving downsizing of America. The War on Terror is really the War on the Middle Class.
I hope the Obama team is ready to go with ads to run next week explaining to the public how the implosion of Wall Street in what is probably about to be the greatest fiscal crisis since the Great Depression is entirely the result of “conservative” fiscal policy… whose one and only commandment has been to let the mighty gurus of capitalism (who of course know better than the rest of you ignorant proles) do whatever they want in the name of *profit*, and to raise even the merest suggestion of oversight or genuine responsibility elicits the loudest denunciations of “Marxism”!!
This implosion is a direct result of Phil Gramm, and Obama should shout loud and clear that a McCain presidency will ensure MORE of this, since it is his economic advisers who have pushed for this outcome at EVERY TURN for well over a decade.
There’s far more to understand with this collapse than the average republican troll can get close to grasping. If Lehman Brothers just shot a few moose from helicopters this wouldn’t be happening… Poor Frank.
From JTaplin:“When you combine this ridiculous willingness to let broker dealers determine their own leverage with the decision three years later to alter the short selling rules to make it easier to short a stock, you have a recipe for financial chaos. These are both Bush administration SEC moves. They stem from a idealogical hatred of regulation.”
GOP trolls get this? No way. Bottom line is this is many of the chickens coming home to roost on the Bush/Cheney/McCain/Palin policies of eliminating regulation in the markets. None of the four GOP leaders will lose their homes in this mess, particularly McBush as his wife is in the liquor business which will prosper regardless of economic turmoil. He failed miserably on his VP choice but chose well on the second wife when it comes to maintaining income.
Frank is wrong that any Liberal would want the economy on its knees to finally convince Americans that more of the same is a really bad idea. There are hundreds of issues where that case can be made. But Frank is a believer and will not even acknowledge what is before his eyes. Very odd that staying the course makes sense to him at this time.
Frank – seek help.
Everyone else – brace for impact. This is going to be a ride rarely seen thanks to Bush/Cheney.
Is it any wonder they want to talk about personality? Because the issues will be unkind. Joe B. said it best – “Whaddya talk about when ya got nothin’ to say?”
Regardless of whether the Republican leadership from 2001-2006 (and 2001-now in the executive branch) is to blame, regardless of whether Greenspan’s to blame, in the minds of most people, the GOP’s on the hook for it. Irrespective of whether that’s the reality (it appears – to me, at least – that they pushed it over the tipping point), it’s definitely the perception.
Um, Frank… None of us want to see the economy collapse.
Hey, I missed that. Did he really say that Democrats want the economy to fall apart because it’d help them win an election?
Wow.
Karl Rove’s a Republican, Frank.
Frank wants the economy to collapse so he can blame the democrats for supposedly wanting the economy to collapse.
I am now convinced that Obama has the best perspective on just how the economy tanked so badly.
After all, two of his top economic advisors are James Johnson and Franklin Raines, who between them chaired Frannie Mae from 1991 to 2004, and who both got sweetheart mortgages from Countrywide as “friends of Angelo’s.” If these two men (especially Raines, whose resignation was prompted by the discovery of huge accounting irregularities at Fannie Mae under his leadership) can’t give Obama the clearest picture on just what the hell went wrong with the economy, I dunno who can.
After all, it takes a thief to catch a thief, and it takes two thieves to make an honest deal, so these two scumbags probably have the best ideas on how to undo their fuckups.
J.
You’re right, jt. Only John “Keating 5″ McSame is qualified to clean up the financial markets. He can do this by cutting taxes on the wealthiest Americans.
Interesting argument, EL. “Your guy palled around with scumbags 20 years ago, so he’s a LOT worse than our guy, who’s still palling around with scumbags today!”
McCain was warning about Fannie Mae and Freddie Mac before they fell apart. Obama was hiring and listening to the advice of two of the guys who ran it into the ground — and still is today.
J.
The Lehman Bros bankruptcy is a reorganizing bankruptcy, which does not include some of its Subs …
It does not portend a collapse … And , if it were simply a finance story, you wouldn’t be posting it. This is isn’t the WSJ.
Sorry if I jumped from A to E without stating B, C and D.
But after 5 years of wishing for defeat in Iraq, and counting the dead as if it were some goulish liberal – foreign – policy – affirming bean counting exercise, can you blame me for seeing this as nothing more than another “See? I told you the Republicans suck!” post ?
No one likes to be treated like an idiot, and that includes me …
It would be a lot easier for me to take this blog seriously, if you didn’t call Sen McCain, McSame, or refer to Republicans as “Rethuglicans” and “Repukes”…
But it is what it is … I will take your posts more seriously, Oliver.
The rest of you will be , well, what you are.
Obama needs to keep it simple with this one.
Republican White House and Congress? Wild de-regulation, the wealthiest Americans gambling with the middle-class’ money (private profits, public losses), no substantial rise in real wages since the 1990′s, uncontrollable health-care and tuition costs, and nobody but nobody looking out for the little guys (the ones Johnathan Syndney McCain III considers to be making less than 5 mil./year).
Let’s have a government that works, not one based on fealty to the president. Let’s have policies that reward people who work a full time, not those who gamble with other people’s money (i.e., Wall Street). Let’s get a POTUS who, while having done very well for himself, isn’t uber-wealthy with over seven different mansions and married to an alcohol heiress like JSMIII.
This week should be interesting. I’m sure Palin is being drilled right now on the nuances of investment banking.
Rudy,
“NeoCon Socialism: Privatize profits, socialize losses.”
Under what Neocon Socialist Rethuglican administration was Fannie Mae established?
Jay Tea, Jay Tea……the argument is not just about specific advisors. It’s about how conservative dogma has pushed this country into a ditch.
It’s like Zython said, “Why do you support all that’s happened in the last 8 years? [I'd make it 28] Why do you see this, and then say to yourself, ’4 more years?’”
Trotting out “well, your guys are crookeder than mine” taunts doesn’t change the FACT that it’s conservatism itself that’s at fault here. “Smaller government is always better” is just NOT SO. Sometimes it is, and sometimes it’s not. And putting the fox in charge of the chicken coop (or leaving no one in charge) is never a good idea, despite what your ideology tells you.
Bruce : setting up a regulatory system that doesn’t work is not conservatism …
Let’s get our chickens and eggs, and horses and carts in the right order.
Big business asked for government intervention , when it asked for Corporations to be called “persons” under the 14th Amendment .
Corporations approved of the Sherman Anti-Trust Act of 1890, as well as the Clayton Act of 1914, and the Smoot – Hawley Tariff of 1928…
These were sold as Regulatory, but were designed to protect really big, big businesses …
Eventually, they would prove disastrous.
The government’s answer ? More of the same .
The government getting into bed with big business is not conservatism. If conservatism failed at anything, they failed to stop it from happening, while the Left applauded .
“It would be a lot easier for me to take this blog seriously, if you didn’t call Sen McCain, McSame, or refer to Republicans…”
How about you don’t take the blog seriously and leave? No one really missed you. I know the chance to get some John McSame for President coasters is irresistable, but there are other places to troll.
Kinda takes the “light” right out of “Enlightened”, doesn’t it?
I think it is pretty enlightened not to suffer fools.
“The former chief executive of Fannie Mae, James Johnson, was the original head of Obama’s vice presidential search team. Johnson resigned from Obama’s campaign amid controversy over discounted home loans he had received”
What evidence is there that Franklin Raines is working for Obama?
Dr. Bernake is putting the patient on placebos and faith healing therapies disguised under legitimate terms. Take this down to the Rx, kneel down, lower your head, close your eyes, and pray with Larry Kudlow:
http://www.federalreserve.gov/newsevents/press/monetary/20080914a.htm
Lest anyone not understand this, the collapse is larger than Lehman Brothers, Merril, Countrywide, AIG, Bear Sterns, the auto industry (ouch those fuel efficiency standards are killing us), et al. If your myopic view is simply domestic politics (Drill Pussycat, Drill, Drill, Drill!), then you have no understanding of the gravity of the situation and the potential scope of this failure. Both parties and the personalities who have been standing in front of the teleprompters have some ‘splaining to do. I anticipate finger pointing in exponential quantities.
Opacity and confusion for some, is clarity for others. This is a moment of reckoning U.S. legitimacy… just saying
Jay Tea, I believe James Johnson was asked to be a part of Obama’s VP vetting committee, not a “top economic advisor,” and he was even canned from that back in June. I think Franklin Raines advises Obama on housing issues. I’ve never seen him described as a “top economic advisor” to Obama. Obama is advised by people like Paul Volker, Laura Tyson, and Robert Reich.
If these two men (especially Raines, whose resignation was prompted by the discovery of huge accounting irregularities at Fannie Mae under his leadership) can’t give Obama the clearest picture on just what the hell went wrong with the economy, I dunno who can.
Once again Mr. Tea scribbles without a familiarity with basic facts. He only knows that Raines and Johnson can be peripherally tied to Mr. Obama, and that is all that matters.
Explain your assertion here, Mr. Tea. What makes Mr. Raines “a scumbag”? What is the nature of the accounting irregularities that have been discovered? How did those irregularities affect capital markets?
Or perhaps you have no answer. Maybe, with the national and world economy mired deeply in the mud after 8 years of Mr. Bush’s management, you’re just happy to be able to fling a bit of the muck on others.
Let me be as plain as I can be, Mr. Tea: I don’t think you have the first clue about any of this. I say the future of the Republican party is the only thing that interests you.
TFJ to quaker. JT is here to throw feces, which is near the top of his intellectual capabilities. I try not to go near the monkey cage, but sometimes I can’t resist.
Explain your assertion here, Mr. Tea. What makes Mr. Raines “a scumbag”?
Both Johnson and Raines got special “Friends Of Angelo” loans from Countrywide while they headed up Fannie Mae, Quaker. Countrywide also gave those sweetheart loans (Angelo being Countrywide’s CEO) to Senators Dodd and Conrad. That’s more than scummy enough for me — they were bought and paid for by Countrywide.
By the way, before anyone asks, that’s the same Countrywide who helped trigger the subprime mortgage mess, and on whose board of directors Massachusetts’ governor (and Obama ally and former client of David Axelrod’s) Deval Patrick once sat.
J.
It’s amazing to me what you classify as scummy.
So, Mr. Tea, may I assume from your neglect of my other questions that you have no answers? You have no idea what “accounting irregularities” were involved. You have no idea how those alleged irregularities affected the stability of Fannie Mae or the national economy.
In short, you know nothing. All that matters is that you can associate these two men with the Obama campaign.
Remind me why you bother to commit your thoughts, such as they are, to pixels.
Obama was hiring and listening to the advice of two of the guys who ran it into the ground — and still is today.
Who? Source, please.
Also, since Mr. Tea’s trespasses against the truth have diverted me, allow me to pull the curtain back on another of his little deceptions:
Mr. Tea deliberately obscures the fact that Mr. Johnson left Fannie Mae 10 years ago! Please explain, Mr. Tea, how Mr. Johnson’s mismanagement remained undetected through two terms of Mr. Bush’s management only to surface now.
Then explain why we should regard anything you offer as anything other than the slick blandishments of a partisan operative.
Jay Tea’s blog is shit. So he comes here to a pretty good one and probably think’s he’s doing God/Palin’s work trolling it.
And yet, he still fails.
You try hard though sparky. E for effort!
I agree with Frank.
Like Frank I’ll be casting my vote for the man who said “The issue of economics is not something I’ve understood as well as I should.”
The people who brought you this problem (and I’m including McCain adviser Phil Gramm in this) should be the only ones to be trusted with solving the problem. Makes sense to Frank and by definition makes sense to me.
Beans
Courtesy of Mr. DiSalle,
Yeah, that’s right, and by “right,” I mean completely wrong.
From the article ::
At least the man who sat idly by while we descended into a Depression is headed back to Crawford in January.
Frank, not all of the units are going into the shitter. It is a holding company, which means that certain operations are held harmless from the failures of others. Nonetheless, there won’t be a Lehman Brothers after today.
I want to believe that you were once a human being with a full range of emotions and capabilities. And now you are reduced to this.
Mr. Frank “I’ve been a conservativebutnotaracist since 1960″ Di Salle, and Mr. Jay “I’m rubber you’re glue” Tea will, sadly, always refuse to see what’s right in front of them.
Their view of US history and economics will always be that everything would be great in this country if not for those dirty commies, FDR and Clinton. If only the idiot government would get out of the way, our lordly corporate genius masters would rule us ever so benevolently.
Reduced to what?
Could you BE any more condescending?
I cannot believe it possible that you can be more insufferably arrogant than you had been in the past, but you have surpassed yourself ..
On a political blog, in a discussion about a failed Investment Company, it has occurred to the Great Zadura, that I once had emotions and capabilities , and they now are gone …
Don’t even bother to tell me about all those swell Seniors you boss around at your trendy “green” corporation that are young ,and vibrant, and full of love for Obama …
And , Mr. Henry, the idea of “benevolent corporate masters” is so 19th Century, no conservative would even think of it…
Only a liberal such as yourself could still believe such things about conservatives …
And only a conservative such as yourself would still be talking about the Smoot-Fucking-Hawley Tariff of 1928.
The Gilded Age was followed by the Progressive Era. The Roaring Twenties was followed by The Great Depression and then, thank God, the New Deal, the Square Deal, and the Great Society. The Great Society’s excesses, along with Vietnam, Watergate, and Carter’s ineptitude, led to the Glorious Trickle Down Revolution that has been going on the last quarter century. That economic model has proven itself worthless. Dismantling the regulation of the financial industry has led directly to the mess we have on our hands today.It’s not hard to see why. When cost is socialized and profit is privatized it’s a pretty good deal for the “Haves”. Not so great for the “Have Nots”.
What’s next, deregulation of the food-processing industry? Let’s deregulate the pesticide industry, too! Safety second, profit first, right?
OK, “corporate masters” is kinda passe, but, hey, I’m probably almost as old as you, Frank.
All I’m sayin’ is, this pendulum is way past due to swing back to the left.
And , Mr. Henry, the idea of “benevolent corporate masters” is so 19th Century, no conservative would even think of it…
Frank’s right. Most modern conservatives are concerned about how to oppress gays and kill brown people.
It all just proves that Bush was right. Businesses really can regulate themselves.
Frank, My company doesn’t discriminate on the basis of age but I do on the basis of open-mindedness and empathy. You are not the first emotional cripple I’ve met, and I suspect that you won’t be the last.