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Wall Street blues

Published/Last Modified on Tuesday, Sep 16, 2008 - 05:19:02 am MST

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The troubles and government takeover of mortgage giants Fannie Mae and Freddie Mac are only a part of the U.S. economic situation.

With the investment bank Lehman Brothers announcing on Monday that it is filing for Chapter 11 bankruptcy, and another investment bank, Merrill Lynch, is making a deal to be purchased by Bank of America, the core of the American economy is shaken again.

The possibility of Lehman Brothers’ failure was forecast late last week but was unable to be averted.

The government already had worked to help rescue another investment bank, Bear Stearns, earlier this year. But that help couldn’t be continued to Lehman Brothers, and the struggling investment bank was told of that on Friday.

The two parts of the American economy that continue to impact investment banks are falling real estate prices and the credit crisis. Until those areas start to see improvement, the economy will continue to be on unstable footing.

It didn’t matter that a group of other banks had made money available to help prop up faltering firms.

As a bank such as Lehman Brothers fails, that could mean that creditors may not get all that is owed to them. There also will be job losses, which does not help the health of the economy. And there are other investment banks that are feeling the pressure that Lehman Brothers, Merrill Lynch and Bear Stearns all did.

In some respects, the failure of companies that make poor investment decisions should be a way to correct the market.

Should the government continue to rescue firms by infusing cash?

We think the taxpayers cannot continue to bail out firms that are struggling. There is not only a limitation to the money the government can make available, but there should be questions as to whether government intervention is a good for the long-term health of the economy.

Unfortunately, there seems to be no end in sight for Wall Street’s circumstances. And that is troubling in that it pushes the nation closer to a recession, if it isn’t already in one.

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hummer wrote on Sep 19, 2008 6:19 PM:

" I guess this topic kind of cooled off now that the stock market has soared higher in one day than in any other time in history. Don't worry, it will level off and react to another crisis later on. Traders have two emotions: Panic and greed. It's always amusing to watch people react to a crisis, it's like living on a Turkey farm during the months leading up to Thanksgiving. "

Barrack Obama wrote on Sep 18, 2008 7:08 PM:

" Hold your tongue Phil, I'd rather bilk them for my social programs than let them save it. We don't need anymore rich people. There's too many in this country...how are we ever going to gain control of the masses if we give them an incentive? "

Billy Hill wrote on Sep 18, 2008 12:20 PM:

" The AIG execs passed on a good offer of a buy out. Why should they if they can keep thier jobs with a Federal bail out.
Fat cats taking care of Fat Cats. More Bush Facism "

Ray wrote on Sep 17, 2008 5:58 PM:

" So, all during this financial fiasco, where is House Financial Services Committee Chairman Rep. Barney Franks(D)?
I would think he should be demanding answers to this mess??? "

Phil Gramm wrote on Sep 17, 2008 12:25 PM:

" Stop Whining! you would have just wasted that money on education or healthcare. Eventually I'll trickle down on you. "

Seriously wrote on Sep 16, 2008 11:44 PM:

" Another 'attack on America" that the Bushadministration failed to stop. How can people even begin to think they are "safer" as these rich greedy people make off with cash they stole from the American tax payer with the blessing of the American government? When will people finally wake up to see they have been punked in the worst way? "

Insane wrote on Sep 16, 2008 5:29 PM:

" How can these executives justify 100 million dollar salaries, and then sit back as everyone's mortgages go into the tank? And McCain wants to give these guys a tax break? Are you kidding me. This whole thing is insane and is anti-American. This is worse than McCains scandal with the Keating five. I will not vote for him. Maybe a third party candidate, but who do you trust? "

Winston Smith wrote on Sep 16, 2008 9:58 AM:

" Initially, under the Clinton Administration wholesale home building was a hedge against NAFTA. Those jobs couldn't be exported so they were not part of the loud sucking sound Ross Perot warned of. Deregulation and greed soon took over and the Bush Administration turned a blind eye as Phil gramm and friends looted it. Current "bailouts" certainly do nothing for the homeowner, they are meant to hide how much the executives stole from the investors "