15 September 2008 will be a day that will go down in memory lane. After many months of having their share prices tossed around (mainly downwards) in the credit storm, some of the biggest names in the global financial sector are keeling under pressure.
3 big news today:
1) Lehman files for Chapter 11 bankruptcy protection
2) Merrill Lynch sold to Bank of America for US$50b
3) AIG turns to Fed for financing in the face of rating downgrades and to ward off a looming liquidity crisis
It is scary how events in the financial sector have unfolded. Now, 3 of the biggest names in the banking sector will only be history.
Bear Stearns was the first to go when it was bought over by JP Morgan in March this year for pittance - $2 per share, over 90% discount, you can't even get such bargains at GSS.
Now no one wants to buy Lehman. The US government has decided not to stand behind Lehman as it has just recently thrown its backing behind US mortgage giants, Fannie and Freddie, who must not fail at all costs. So Lehman is left to collapse in the cold.
AIG is an international insurer, and I dread to think what would happen if anything adverse should happen to the insurance group. The millions who have paid AIG for peace of mind (me including) are probably all feeling panicky now. But I surely hope that the US government will support AIG. It will be unfair if even insurance monies are subject to the same great deal of volatility we have seen in the capital markets.
It seems cash is king for now. Deposits placed with banks may turn to nothing when banks collapse, and the monthly insurance premiums we set aside as protection for our future is now facing the possibility of turning to dust.
I really really hope the financial storm will come to an end soon. We are already seeing a restructuring of the financial sector in general - big names disappearing and new giants emerging, soverign wealth funds taking stakes in some of the banks, banks segregating the more risky investment banking business from other businesses...what's next to come? I surely hope clear skies are on their way.
3 big news today:
1) Lehman files for Chapter 11 bankruptcy protection
2) Merrill Lynch sold to Bank of America for US$50b
3) AIG turns to Fed for financing in the face of rating downgrades and to ward off a looming liquidity crisis
It is scary how events in the financial sector have unfolded. Now, 3 of the biggest names in the banking sector will only be history.
Bear Stearns was the first to go when it was bought over by JP Morgan in March this year for pittance - $2 per share, over 90% discount, you can't even get such bargains at GSS.
Now no one wants to buy Lehman. The US government has decided not to stand behind Lehman as it has just recently thrown its backing behind US mortgage giants, Fannie and Freddie, who must not fail at all costs. So Lehman is left to collapse in the cold.
AIG is an international insurer, and I dread to think what would happen if anything adverse should happen to the insurance group. The millions who have paid AIG for peace of mind (me including) are probably all feeling panicky now. But I surely hope that the US government will support AIG. It will be unfair if even insurance monies are subject to the same great deal of volatility we have seen in the capital markets.
It seems cash is king for now. Deposits placed with banks may turn to nothing when banks collapse, and the monthly insurance premiums we set aside as protection for our future is now facing the possibility of turning to dust.
I really really hope the financial storm will come to an end soon. We are already seeing a restructuring of the financial sector in general - big names disappearing and new giants emerging, soverign wealth funds taking stakes in some of the banks, banks segregating the more risky investment banking business from other businesses...what's next to come? I surely hope clear skies are on their way.
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