Question for the financial guru's out there
mammasan
Posts: 5,656
Ok I have a decent amount of cash tied up in the market. My best friend is a broker and he is in full panic mode after this weekend and I haven't been able to get a hold of him today. I'm not usually one for doom and gloom scenerios but seeing my friend flipping the fuck out Saturday night has me a bit concerned. What effects will Lehman Brother liquidation and AIG's cash problems have on the overall market and the economy. I know for sure that WaMu is in serious trouble as well, my girlfriend works for them, and she can't even sleep at night because of all the shit going on at her job.
"When one gets in bed with government, one must expect the diseases it spreads." - Ron Paul
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Lehman’s bankruptcy has upended financial markets, with the dollar and stock futures sharply lower on the news. Investors are worried that the bankruptcy will set off a chain of other financial meltdowns.
This weekend's events were precipitated by the Treasury Department's decision not to help potential buyers of Lehman as it did to facilitate the sale of Bear Stearns.
A more upbeat perspective sees these events as a catharsis that will make the financial system more resilient. Bank of America’s acquisition of Merrill Lynch testifies to this more optimistic view.
The Federal Reserve is also aggressively providing liquidity to the system by agreeing to take a wide range of assets, including equity, in loan agreements. An emergency rate cut is a possibility.
The next six to 12 months will be extraordinarily difficult for markets and the global economy, but what this past week's events signal is less likely the unraveling of the financial system than the beginning of the end of this unprecedented crisis.
with all due respect - but if the shit is gonna hit the fan, would you guys actually blog about it?
i mean - ultimately if consumers panic, everything is going down the tubes so, no financial institution is gonna blog about it being doom and gloom are they?
No undue respect. But, I believe we would. We forecasted the current recession (if you believe it's a recession) about a year ago and the downturn in housing well before it happened. We were one of the first to do so for both. It's our job. We are in economic forecasting, we need to pick a side or we'll be seen as "two-handed" which is very bad in this business. Actually, it's better to be wrong.
I do admit, however, that forecasters typically practice the "keep on saying the same thing and eventually it will come true approach" though. So, I'd say take things with a grain of salt.
That said, recessions are the best time of the business cycle for economists. So, saying bad things will happen may actually increase demand because people get scared and want economic info.
AIG is definately next, FF.
and this fella is right about everything he says, with the possible exception that it will not be an "emergency rate cut" as the SCHEDULED Fed meeting is TOMORROW, so it would need to be one HELL of an emergency to take place between now and tomorrow.
I'd bet on a quarter point or a hold and language suggesting the possibility of a rate cut at the next session, or assurances that an emergency cut is still on the table. Like a CNBC commentator said, "either they talk and act dove, or they talk dove".
I WOULD caution that this is NOT inherently, necessarily, or even likely the end of this mess. There are ALL kinds of counterparty considerations that could come in to play, this will further deleverage the markets, and credit concerns (despite massive and unprecedented Fed liquidity) are still very real. If AIG kicks the bucket hard instead of soft (with a trillion dollar balance sheet) shit could get even worse.
Off to the gym with me!
oh,
mamasan, what exactly is your SPECIFIC concern about the markets.
I mean what is your personal fear about your funds?
If I opened it now would you not understand?