Banks in Crisis

ThinkPOP is on the move this morning, but I didn’t want to wait to post on the financial crisis spreading through the banking industry. Over the course of the weekend we learned Merril Lynch will sell itself for $50 billion ( 1/2 of what it was worth last year) Lehman is filing Chapter 11 after it was unable to find a buyer, Washington Mutual has lost some $50 billion of value, and AIG is seeking a bridge loan from the Federal Reserve as it braces for a devaluation from the street. The markets in Europe and Asia are already down, and US stocks are set to tumble.

The federal reserve and treasury finally drew the line on further rescue measures apparently only willing to rial tax-payer dollars on Bear Sterns, Fannie Mae and Freddie Mac.

I’m not an economist or an expert on the financial markets, but from a layman’s point of view this seems like the kind of brutal, rapid correction the market needed to determine how deep the subprime lending crisis goes.

I am desperate to hear from Senators Obama and McCain on what actions they see as necessary to bridge this disaster. Their reactions to this domestic financial crisis will be as telling as their reactions to the Russian invasion of Georgia.

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One Response

  1. I too agree that rapid corrections are what is needed. I never agree that the government get involved in this sort of stuff in the first place, but if it is going to do something, handing out cash it doesn’t have isn’t a particular bright idea.

    As far as the candidates, this is where Obama can pick up some steam. McCain is really iffy on some of the domestic issues, and let’s face it, it’s probably the most important thing to most Americans. If Obama can convince people he can actually do something about it; he will be home free.

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