Official Global Financial Crisis Thread

[2952-0-0]

We will need a thread to aggregate all the information and developments pertaining to the global financial crisis, and expect this thread to become very busy soon.

Major Casualties as of October 2
Northern Rock (nationalized)
Terra Securities (bankrupt)
Bear Stearns (sold at firesale price)
Countrywide Financial (sold at firesale price)
IndyMac (bankrupt)
Fannie Mae, Freddy Mac (nationalized)
Lehman Brothers (bankrupt)
Merril Lynch (sold at premium)
AIG (nationalized)
HBOS (sold at premium)
WaMu (bankrupt)
Bradford and Bingley (split up, nationalized, sold at firesale price)
Fortis (nationalized)
Glitnir (nationalized)
Hypo Real Estate (private sector bailout)
Wachovia (Citigroup/FDIC buyout)
Dexia (nationalized)
Landsbanki (nationalized)
Kaupthing (force-fed state loans)

On Suicide Watch
National City
Unicredit
Hartford
Prudential
Metlife

Other Bank Runs To Date
Bank of East Asia
ICICI Bank

[Torie]

National City bank is on the ropes.

[angus]

And the biggest crisis of them all is one willfully and carefully crafted by my government:

http://financialservices.house.gov/

Thanks to George Bush and the Democrats in the U.S. congress, any stock that you own that goes up doesn't really bolster your net worth, does it?  Even if you gain, say, a million dollars tomorrow on the open market, it only means that you're now 699,,999,000,000 in debt instead of 700,000,000,000 in debt.  If you're a yank, that is.  If you're not, then good for you.  But is good for you?  Since most of the world's capitalists depend on the world's economic engine, I guess that makes all three hundred million of us a sort of modern day Atlas.  Don't think you'll get to re-arrange your cloak while we agree to carry a load of golden apples another time.  The weight of the sphere gets heavy, even for us.

Bad mojo.



"Watch it burn, Bobby.  Sometimes you just gotta grab a beer and watch it burn, Bobby."
                --Hank Hill, Arlen, TX


"I'm asking the congress to appropriate seven hundred billion dollars to meet this crisis."
               --George Bush, Washington, DC

[Lunar]

Wachovia has an announcement for you all, sent out on Citigroup letterhead:

[Silent Hunter]

FTSE 100 closed below 5,000 today for the first time in I don't recall how long.

That's an indicator we're in severe trouble.

[Јas]

Is Anglo-Irish Bank still on suicide watch?

Yesterday, the Irish Government decided to guarantee the entire Irish-owned part of the banking system for 2 years, exposing the State to the liabilities at the banks totalling €400 billion. The legislation should be finalised and passed later today.

The decision may ruffle some feathers around Europe.

On the back of the news Anglo-Irish shares jumped 67% yesterday (after falling 47% on Monday). And are up a further 18% this morning.

EDIT: Indeed Britain is clearly not happy with the move.

[Filuwaúrdjan]

There's been some speculation that the HBOS deal might fall through, but that seems to be baseless.

[2952-0-0]

There's apparently a dogfight between Citi and Wells Fargo over the carcasses of Wachovia.

[Filuwaúrdjan]

More trouble with Hypo Real Estate.

[minionofmidas]

More trouble with Hypo Real Estate.

Good. That plan there was utter garbage and deserved to fail.

[Filuwaúrdjan]

More trouble with Hypo Real Estate.

Good. That plan there was utter garbage and deserved to fail.

What was the plan [qm]

[minionofmidas]

Debts to be guaranteed, first 40% on a 60-40 split between all the other German banks and the feds, remainder by the federal taxpayer treasury. So a) (as also in Ireland) the feds are basically handing out money for free without, for purely ideological reasons, asking for anything back b) all the other German banks are also saddled with additional bad debts! Hooray! Maybe we can get them to fail as well!
Needless to say, the thing fell over last-minute squabbles about which private bank guarantees how much, exactly.
They're trying to find some solution. If no solution by the time stock markets open in Asia tomorrow morning, the bank's pretty sure to just go flat bankrupt.

[Swing low, sweet chariot. Comin' for to carry me home.]

This is NOT 1987.

[afleitch]

This is NOT 1987.

It's worse. Reminds me of the 1914 'crash' actually - which was eventually cancelled out by the war economy.

[angus]

There's apparently a dogfight between Citi and Wells Fargo over the carcasses of Wachovia.

Citibank had an exclusivity agreement with Wachovia, but Wells Fargo is trying to buy it the right way.  In fact, Wachovia CEO Robert Steel had been working on a deal with Wells Fargo when the government pushed the Citibank deal on them.  Both Citibank and Wells Fargo think Wachovia is worth about 60 billion, and Wells Fargo is offering what amounts to about 15 billion, whereas the citibank offer is about 2 billion.  Basically, under the Wells Fargo deal, Wachovia shareholders would receive 0.1991 shares of Wells Fargo for every share of Wachovia stock they own, valuing Wachovia at about $7 per share.  A good deal compared to Friday's wachovia closing price of about $6 per share, and much better than the forced $1 per share deal brokered by the FDIC.

The FDIC wants the citibank deal to go forward, because it is charged with getting the best deal for taxpayers, but that's irrelevant because the Wells Fargo offer does not rely on any assistance from the government.  And now that the congress has passed the bailout megabill, citibankers may feel like they can unload some distressed assets for a handy profit.  At the expense of the American people.

It's a nasty business when government steps into business deals like this.  I'm hoping the courts rule in favor of allowing the Wells Fargo deal to proceed. 

[Swing low, sweet chariot. Comin' for to carry me home.]

This is NOT 1987.

It's worse. Reminds me of the 1914 'crash' actually - which was eventually cancelled out by the war economy.

yep, 1987 was just a market correction.  it had little to nothing to do with the banking system or the overall economy.  And in 1987, stocks actually ended up for the year. 

What's happening now is totally different.

[Swing low, sweet chariot. Comin' for to carry me home.]

this market needs to hurry up and get where it's going, and fast. 

[Eraserhead]

800 points. Brutal.

[afleitch]

this market needs to hurry up and get where it's going, and fast. 

How do you cross a shallow river without a boat? Do you swim across fighting the current hoping to be quick and reach the other side, knowing if you tire or misjudge you might be swept downstram. Or do you you wade across, slowly but with more chance of reaching the other side intact?

We have too many swimmers at the moment. People hope the downturn will be quick and the upswing afterwards will be even quicker. Isn't going to happen. We're in this to the start of the next decade with periods of little growth, little trust in the banks and a flatlining economy.

[Joe Republic]

this market needs to hurry up and get where it's going, and fast. 

How do you cross a shallow river without a boat? Do you swim across fighting the current hoping to be quick and reach the other side, knowing if you tire or misjudge you might be swept downstram. Or do you you wade across, slowly but with more chance of reaching the other side intact?

Considering the person to whom you're directing this question, the obvious solution is to walk across the surface of the river to the other side.



(sorry, couldn't resist)