and here's a little piece for NYC dwellers to consume - as they await the monday open preparing to buy financials with unfettered abandon............
NY Post
US ECONOMY'S COLLAPSE FEAR
By ZACHERY KOUWE
March 15, 2008 -- A tsunami of fear slammed the financial world yesterday as one of Wall Street's biggest investment banks teetered on the brink of collapse and the federal government was forced to engineer an unprecedented rescue.
Stocks were pummeled across all sectors, with the Dow Jones industrial average swinging wildly, falling as much as 360 points between the day's highs and lows.
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The chaos eventually ended with the Dow down 194.65 points to 11,951.09 - a seemingly welcome relief from the bloodbath earlier in the day. But every major index fell by 1.5 percent or more.
The panic struck trading desks early in the morning when the Federal Reserve announced that it was invoking a procedure from the Great Depression to save Wall Street giant Bear Stearns from going belly-up.
The near-collapse of the investment bank served as another reminder to investors that the global credit crisis continues to wreak havoc on the economy.
Bear is the fifth-largest investment bank on Wall Street and a significant player in the market for securities backed by mortgages.
The government essentially stepped in to provide desperately needed access to cash for Bear, which has been pummeled over concerns about its large holdings tied to the battered US housing market.
With traders and investors worried the bank was running out of money to pay debts, its ability to do business was virtually halted.
"We have been subject to a significant amount of rumor and innuendo over the past week," said Bear CEO Alan Schwartz. "Given the nervousness, people wanted to protect themselves."
While some on Wall Street initially saw the Fed's bold rescue as a positive move to prevent the collapse of a giant financial institution, the reaction soon turned to panic as worries grew that other banks might suddenly also be vulnerable to the same cash crunch.
"The firm did not have enough cash to pay its debts at that point in time and would have gone under were it not for the Fed," said one banker involved in arranging the bailout. "Regulators felt that Bear Stearns could not be allowed to fail."
Shares of Bear Stearns lost nearly half their value yesterday and the bank said it has hired an outside adviser to pursue options - Wall Street shorthand for finding a buyer for the firm.
"We are in a tenuous market environment and experiencing a true crisis of confidence," said Oppenheimer analyst Meredith Whitney.
The grim news came in a week that saw the Dow soar a whopping 416 points on Tuesday after the federal government said it would ease the credit crunch by allowing banks to use their mortgage-tainted holdings as collateral to borrow cash.
That good news was followed by a ray of hope on Thursday, when Standard & Poor's surprisingly said "the end is now in sight" for subprime mortgage-related write-downs by the major banks.
However, yesterday's meltdown now has US and global markets bracing for another shoe to drop.
Harvard University economist Martin Feldstein further sounded alarms yesterday, saying: "I believe the US economy is now in recession," and that it could "become the worst recession we have seen in the postwar period." |
