By Barry Grey
www.wsws.org
16 September 2008
The end of Lehman Brothers and Merrill Lynch, two of the largest Wall Street investment banks, one week after the government takeover of the mortgage finance giants Fannie Mae and Freddie Mac, marks a new stage in the convulsive crisis of American capitalism.
On Monday, global markets fell sharply in a sign of mounting panic and doubt over the stability of the entire US banking system. Throughout Europe stock markets plunged by as much as 4 percent.
The fall on Wall Street was even steeper, with the Dow Jones Industrial Average losing 504 points, or 4.42 percent. There is every indication that the sell-off will intensify, with the full implications of the collapse of the two Wall Street banks as yet far from clear.
The immediate concern is the fate of American International Group (AIG), the world’s largest insurance company, and Washington Mutual, the largest savings and loan bank in the US, both of which are teetering on bankruptcy.
The Wall Street crisis and the failure of American capitalism.
***
More US corporate bailouts on the way
By Barry Grey
www.wsws.org
16 September 2008
The US government, brushing aside its constant invocations of “private enterprise,” has dispensed hundreds of billions of dollars in cheap loans to prop up the banks. Last March, the Federal Reserve Board paid JP Morgan Chase $29 billion to take over the investment bank Bear Stearns when Bear was on the verge of declaring bankruptcy.
Only a week ago, the US Treasury committed at least $200 billion in taxpayer funds in the government takeover of Fannie Mae and Freddie Mac—a move that makes the government responsible for the two companies’ combined $5.3 trillion in mortgage liabilities.
The claims that the government, in allowing Lehman Brothers to collapse, has “drawn the line” on further taxpayer bailouts of failing corporations are false. The government decided to let Lehman fail, in part, to conserve the dwindling funds at the disposal of the Federal Reserve and calibrate hand-outs from the Treasury—which faces record budget and trade deficits and a soaring national debt—to be used to rescue more strategic companies.
see
Lehman, Bear, Freddie, Fannie: What Does It All Mean??? by Josh Sidman
Capital Punishment: Lehman on its way to the Gallows? By Mike Whitney
Marc Faber about Lehman Brothers bankruptcy
Merrill now in shorts’ sights as Lehman crumbles
“Change” Part I: Has the West Reached Its Limits? by Richard C. Cook
The Economy Sucks and or Collapse
Filed under: Business, Capitalism, Corporations, Dandelion Salad News or Politics, Economy, Obama-Barack, Politics Tagged: | Grey-Barry, McCain-John, The Economy Sucks and or Collapse
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]
[...] The Wall Street crisis and the failure of American capitalism [...]