World Markets Tumble On Wall Street Crisis

Lehman Brothers Bankruptcy Prompts Huge Cash Infusion By EU, UK Central Banks

(AP)  World stock markets turned sharply lower Monday after a double-fisted blow from Wall Street - news that Lehman Brothers had filed for bankruptcy and Merrill Lynch would be sold to Bank of America.

In Europe, the FTSE-100 share index closed down 3.9 percent in London, the Paris CAC-40 was off 3.7 percent and Germany's DAX 30 index of blue chips sagged 2.7 percent.

In the U.S., the Dow Jones industrial average fell 504.48 points, or 4.42 percent - their worst point drop since the Sept. 11 attacks - in New York trading.

Broader stock indicators also fell. The Standard & Poor's 500 index declined 58.74, or 4.69 percent, to 1,192.96, and the Nasdaq composite index fell 81.36, or 3.60 percent, to 2,179.91.

In Russia, where stocks were already suffering from falling oil prices and worries about political interference in business, the MICEX index was down 6.2 percent and RTS index was 4.8 percent lower.

The falls were led by insurance and financial stocks, with shares in French insurer AXA SA down 8.5 percent, Germany's Commerzbank AG falling 9 percent, and Britain's HBOS 17.55 percent lower.

"In the short term, we are looking at a fresh wave of weakness hitting financial markets," said Chloe Magnier, chief economist at Saxo Bank in Paris. "I'm not optimistic about the coming months."

Bond prices surged as investors fled to the security of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, plunged to 3.54 percent from 3.72 percent late Friday. The dollar was lower against other major currencies, while gold prices rose.

Europe's major central banks moved quickly to calm markets Monday, pumping billions of euros and pounds into the financial system. The European Central Bank loaned euro30 billion but said it received 51 bids for euro90.3 billion (US$127 billion) on its one-day tender with a bid rate of 4.25 percent - a clear sign that demand for cash is over the top.

Similarly, the Bank of England offered up 5 billion pounds (nearly US$9 billion, euro6.4 billion) in a three-day auction - but bids were nearly five times higher, at 24.1 billion pounds. (euro30.4 billion; US$43 billion)

The 158-year-old Lehman Brothers Holdings Inc. filed Monday for Chapter 11 bankruptcy. The company was crippled by US$60 billion (euro43 billion) in soured real-estate holdings and unable to find an investment partner to throw it a lifeline.

Officials from the government and various banks failed to find a solution during weekend meetings. During the talks, when Bank of America balked at buying Lehman, the government urged it to buy investment bank Merrill Lynch instead.

The US$50 billion (euro36 billion) deal may stop speculators whose next target after Lehman would have been Merrill, according to Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe in London.

The moves will create a "firebreak in the financial structure," and once disappointment that Lehman didn't manage to make a deal has been digested, stocks will start to recover, he said.

"You are going to have a torrid day today, probably tomorrow as well, but then I think people are going to start thinking there's some opportunity out there to be engaged," he said.

Before that, markets also have to react to a possible restructuring of the world's largest insurance company, American International Group Inc. AIG's troubles a week after its stock dropped 45 percent are perhaps most worrisome for some investors because of the company's enormous balance sheet - and the risks that its troubles could spill over to its customers.

Light, sweet crude for October delivery fell US$3.57, or 3.53 percent, to US$97.61 a barrel on the New York Mercantile Exchange, after earlier dropping to US$94.13, the lowest level since Feb. 14.

Asia's biggest stock exchanges in Japan, Hong Kong and South Korea were closed for holidays, but every market open closed deep in the red.

India's Sensex tumbled 3.4 percent, Taiwan's benchmark plummeted 4.1 percent and Singapore dropped 3.2 percent.

In Latin American markets also plunged, with Brazil and Argentina falling the hardest, with 6.2 percent and 3.28 percent drops. In Mexico, the market slipped 1.94 percent, while in Chile stocks were down 0.8 percent.

[babooph]

Many years of tax cuts for the rich seem to not work very well -without the US propaganda system lauding the big lie,it could never have become policy.

[bobnjersey]

[I submit to you perhaps if some of those SECULARIST financial geniuses had acquired and lived by the rudiments of the ETHICAL values you scoff at, we wouldn''''''''t now be facing this CRISIS!
[Posted by mydiatribe at 02:48 PM : Sep 15, 2008]

by this do you mean ''no usury'' (ie. no credit, no interest on a loan)?

are there any non-secularist financial geniuses?

[doctxt]

Go ahead, blame a person or party to exempt yourself, but remember "In God we trust, in all others beware of" - Maybe you forgot about the WHOLE quote...

[wardoglrs]

You know whats really funny is the voter is the one to blame. "Game Over"

[wardoglrs]

%u201CWe will have world government whether or not we like it. The only question is whether world government will be achieved by conquest or consent.%u201D
James Paul Warburg (monopoly banker in testimony before the US Senate Committee on Foreign Relations. Warburg was an agent of the Rockefeller-JP Morgan-Rothschild banking bloc and son of Paul Warburg, chief architect of the %u201CFederal Reserve%u201D Corporation, an unconstitutional private bank monopoly set up for cartel hegemony. February 17, 1950)

"Control oil and you control nations; control food and you control the people."
Henry Kissinger (ex U.S. Secretary of State and ongoing agent for the ruling class. Living. Quote 1970)

[newsjunky5]

"YOU CANT BORROW MONEY TO GIVE THE RICH PEOPLE TAX BREAKS. IT WILL NOT WORK THEY END UP WITH ALL THE MONEY AND THE WORKING CLASS ENDS UP WITH NOTHING."
-------------------------------------------
You can, but first you have to impose Patriot Act restrictions on the working class.

[gwjackie]

This is the new John McCain math he does this because if he gets in office all you will need is the minus sign!

[gwjackie]

1+1 2 2=6 no good republicans

[gwjackie]

1+ republican a pile of horse shi! = apile of horse shi!

[gwjackie]

YOU CANT BORROW MONEY TO GIVE THE RICH PEOPLE TAX BREAKS. IT WILL NOT WORK THEY END UP WITH ALL THE MONEY AND THE WORKING CLASS ENDS UP WITH NOTHING.

[gwjackie]

If the American people put another Republican in office for four more years the country will never climb out of this. We are as close to a total collaps as we were in the great depression.

[brianbwb-2009]

"Merrill Lynch, bullish(it) on America.

Put your money with the Bulls, and act surprised that bulls also excrete?

[skyk239]

Where in the F*** did you dream that garbage up from?!?!

Posted by hungry1968 at 03:02 PM : Sep 15, 2008

It''s called desperation!! They had a plan you know. Get the Old Man elected, Pray for him to kick off and THEY with the wicked Witch of the North in charge, would control the whole country. This REALLY makes that highly unlikely!!

[dredre2k]

For the last 8 years, Wall St. has been the cause of the big NIGHTMARE for the middle class. High gas, crooked mortgages, slumping dollar, inflation...

Republicans have been boozing Wall st. up, and now its boozed over and out of control!

[mytoosense]

pretty sure the economy doesnt like Barrack Obama running for President
Posted by TheVicar1

Vicar1, your religious right robes are showing.

[hungry1968]

jMcGilvray
Your own prejudice against religious believers is quite apparent in your post.
I submit to you perhaps if some of those SECULARIST financial geniuses had acquired and lived by the rudiments of the ETHICAL values you scoff at, we wouldn''''t now be facing this CRISIS!

Posted by mydiatribe at 02:48 PM : Sep 15, 2008





This is the most absurd post, I think that I''ve EVER seen.

Because their companies failed and are going bankrupt, according to you, their leaders are all secularists?!?!?

Where in the F*** did you dream that garbage up from?!?!

[hungry1968]

with barry obama;s wild spending of campaign money, we can''''t afford to put him in office.

Posted by funzie50 at 02:27 PM : Sep 15, 2008





He HAS the money up front, and then spends it.

Unlike McCain that promises to keep borrowing HUNDREDS OF BILLIONS of dollars from China, so that we have to pay back the principal AND the interest, which ultimately costs more than double than having the money up front!

[stevex47]

Hey, um, nutjobs...stop trying to ruin the United States okay?

[stevex47]

"with barry obama;s wild spending of campaign money, we can''''t afford to put him in office."

Ya, that proves it, the republicans really know how to be fiscally responsible, ya, riiight.

Oh by the way, did you know Cindy mcsame wore $300,000.00 worth of clothes the nite of the RNC?

[mydiatribe]

jMcGilvray
Your own prejudice against religious believers is quite apparent in your post.
I submit to you perhaps if some of those SECULARIST financial geniuses had acquired and lived by the rudiments of the ETHICAL values you scoff at, we wouldn''t now be facing this CRISIS!