The Dow Jones fell more than 500 points today after Lehman Brothers declared bankruptcy, Merrill Lynch sold itself to Bank of America and A.I.G., the largest insurer in America, lost 61% of its value over concerns that it wouldn't be able to raise $75 billion in capital and might itself go belly-upAs I noted in this post last night, the year has already seen the selling of Bear Sterns to Chase and a government takeover of mortgage giants Fannie Mae and Freddie Mac.
In addition, Washington Mutual may go under before the week is out (it's stock is now trading below $2 and has been cut to junk) and Wachovia is having problems as well.
The markets today had their worse day since 9/11 and it may get worse before the end of the week if A.I.G. can't sort out its problems because every major bank has exposure to the insurer.
The Fed has injected $70 billion of reserves into the banking system, the most since 9/11, to ease the crisis.
Still, you can hear the jitters from Wall Street to Main Street tonight.
Bad news, right?
Not if your John McCain:
On the campaign trail in Jacksonville, Florida, the Senator declared this morning that "the fundamentals of our economy are strong," despite what he described as "tremendous turmoil in our financial markets and Wall Street."
The fundamentals are strong?
Many companies are completely overleveraged, the credit market is paralyzed, the American consumer is in debt up to his/her eyeballs, the federal government is running the largest budget deficit ever, unemployment is at 6.1% (and you can bet unemployed Merrill Lynch and Lehman employees, along with the announced cuts by HP today, will make the number grow next month), and oil still remains at $95 a barrel, which only seems cheap because it was near $150 just a while ago - and McCain says the "fundamentals are strong"?
Sheesh - McCain was right when he said that he doesn't know anything about the economy or Wall Street.
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