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Commentary :: Globalization
Wall St's "Melt Down" is Ronald Reagan's "Legacy" on a Silver Platter!!!
17 Sep 2008
Modified: 11:59:46 PM
The Scary Ghost of Ronnie Reagan: The Dow fell almost 450 points and the Nasdaq fell nearly 5 percent in its worst day since the aftermath of the September 11 attacks in 2001 as rattled investors worried about who could be the next victim of the global credit crisis.
Wall St's ongoing "Melt Down" is a Grande Tribute and fitting Memorial,instigated by America's "Biggest Corporate Crooks",and exquisitely harmoniously in tune to the Stupendous "Poison Legacy" of their pimp benefactor,and also former US President Ronald Reagan!!! America naturally exclaims "Bravo and Three Cheers"!!!
U.S. stocks dropped to a three-year low on Wednesday as the U.S. rescue of insurer AIG failed to calm a crisis of confidence in global markets and banks were scared to lend to each other.

The Dow fell almost 450 points and the Nasdaq fell nearly 5 percent in its worst day since the aftermath of the September 11 attacks in 2001 as rattled investors worried about who could be the next victim of the global credit crisis.

Of the two remaining major investment banks, Goldman Sachs (GS.N) stock suffered its biggest one-day drop ever. Morgan Stanley (MS.N) stock had its worst day in at least 15 years as investors worried whether it would survive as an independent investment bank in the current environment, after Lehman Brothers Holdings (LEH.P) went bankrupt and Merrill Lynch (MER.N) was forced to sell itself this weekend.

"The fear is, 'Who is next?"' said John O'Brien, senior vice president at MKM Partners LLC in Cleveland. "It almost feels like people scour the books and say, 'Who is the next likely target that we can put a short on?' and that spreads continuous fear."

After the closing bell, reports on deal making among financial companies picked up pace. Morgan Stanley (MS.N) was discussing a merger with regional banking powerhouse Wachovia (WB.N), the New York Times reported. And sources told Reuters that Washington Mutual (WM.N), the country's largest savings bank, put itself up for sale.

The Dow Jones industrial average (.DJI) fell 449.36 points, or 4.06 percent, to 10,609.66, its lowest level since November 2005. It was the blue-chip Dow average's biggest percentage drop since Monday, when it fell 504.48 points, or 4.42 percent, the most since the aftermath of 9/11.

The S&P 500 (.SPX) fell 57.20 points, or 4.71 percent, to 1,156.39, its lowest level since May 2005 and its biggest percentage drop since September 17, 2001, when the markets reopened after the September 11 attacks.

The Nasdaq also fell the most since September 17, 2001. It shed 109.05 points, or 4.94 percent, to 2,098.85, its lowest level since August 2006.

Goldman Sachs shares fell 13.9 percent to $114.50 and, at one point, fell below $100 for the first time in more than three years. Morgan Stanley shares fell 24.2 percent to $21.75.

The White House defended government actions to shore up troubled insurance company American International Group Inc (AIG.N), saying it was to prevent broader harm and noting it was "concerned about other companies." AIG is one of the 30 companies whose stocks make up the blue-chip Dow average.

Late Tuesday night, the Federal Reserve said the Federal Reserve Bank of New York will lend up to $85 billion to AIG in a plan aimed at saving the insurer from a "disorderly failure" that could wreak economic havoc. But on Wednesday, investors doubted whether the rescue plan would be enough. AIG shares sank 45.9 percent to $2.03 on the New York Stock Exchange.

The Fed's move was the latest in a string of bailouts, a bankruptcy on Wall Street, and central banks around the world flooding the financial system with money to prevent it from seizing up.

Strategists said the damage threatens to go beyond the financial services sector, hurting corporate profits and spreading panic among increasingly overstretched consumers.

"What does tomorrow bring? Will it start spilling over into consumers? Will there be runs on the banks? There's a million things going on," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets.

"Hopefully, we'll see a capitulation soon when everybody throws in the towel," he added.

Also worrying investors was news on Tuesday that the Reserve Primary Fund, a money-market mutual fund, fell below $1 a share in net asset value because of losses on debt issued by now-bankrupt Lehman Brothers Holdings (LEH.N)(LEH.P).

"Every investor is now questioning each and every investment they have anywhere on the planet," said John Schloegel, vice president of investment strategies at Capital Cities Asset Management in Austin, Texas.

"It's leading them to sell anything that has any type of risk -- to sell first. It's an unusual situation we are in right now."

A break below important technical support for both the Dow and S&P 500 accelerated the market's slide, traders said.

The bank-to-bank cost of borrowing overnight dollars fell more than a percentage point on Wednesday, but the premium paid for the greenback and sterling over three months swelled, fanning fears that the supply of credit might be drying up in the global financial system.

The drop in Morgan Stanley's shares came despite the bank's posting quarterly results that beat Wall Street's estimates.

Banks frantically seeking dollar funds have been stonewalled by others increasingly reluctant to lend amid uncertainty and nervousness following the collapse of Lehman Brothers and the bailout of AIG.

The U.S. Securities and Exchange Commission issued new rules governing the conduct of people who profit from stock declines as shares of major financial institutions plummeted on fears of a global credit crunch.

The three SEC rules cover shares of all publicly traded companies and follow a brief emergency rule this summer that was aimed at curbing illegal short selling in 19 major financial stocks.

Trading was heavy on the New York Stock Exchange, with about 2.14 billion shares changing hands, above last year's estimated daily average of roughly 1.9 billion, while on the Nasdaq, about 3.12 billion shares traded, also trumping last year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones by 15 to 1 on the NYSE and on the Nasdaq, by 6 to 1.

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