US ECONOMY
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Sunday, Sept. 14 - Trouble brews
News that Lehman Brothers was on the brink of collapse and scrambling for a buyer first surfaced on
Friday. But by Sunday, there were still no suitors for the 158-year old investment bank, and bankruptcy
seemed inevitable. Indeed, just after midnight, in Monday's early hours, the firm officially announced its
intention to file for Chapter 11.
Equally as staggering, just hours after reports surfaced that Bank of America broke off of talks to buy
Lehman, BoA unleashed the news that it would pay $50 billion to scoop up Merrill Lynch, another iconic
Wall Street name.
As if that weren't enough, American International Group, the nation's largest insurer, said that it planned
to sell some of its troubled assets in order to raise cash and boost investor confidence.
Concerns about the credit crisis grew increasingly dire, even though the government had already
pledged to backstop Fannie Mae and Freddie Mac up to $200 billion just one week ago, and months
earlier engineered JP Morgan's purchase of Bear Stearns with a $29 billion guarantee.
But it looked like that wouldn't be enough, so Sunday afternoon the Federal Reserve, along with 10
banks, announced a $70 billion pool of funds to aid troubled financial firms. The U.S. central bank also
loosened its lending restrictions.
News that Lehman Brothers was on the brink of collapse and scrambling for a buyer first surfaced on
Friday. But by Sunday, there were still no suitors for the 158-year old investment bank, and bankruptcy
seemed inevitable. Indeed, just after midnight, in Monday's early hours, the firm officially announced its
intention to file for Chapter 11.
Equally as staggering, just hours after reports surfaced that Bank of America broke off of talks to buy
Lehman, BoA unleashed the news that it would pay $50 billion to scoop up Merrill Lynch, another iconic
Wall Street name.
As if that weren't enough, American International Group, the nation's largest insurer, said that it planned
to sell some of its troubled assets in order to raise cash and boost investor confidence.
Concerns about the credit crisis grew increasingly dire, even though the government had already
pledged to backstop Fannie Mae and Freddie Mac up to $200 billion just one week ago, and months
earlier engineered JP Morgan's purchase of Bear Stearns with a $29 billion guarantee.
But it looked like that wouldn't be enough, so Sunday afternoon the Federal Reserve, along with 10
banks, announced a $70 billion pool of funds to aid troubled financial firms. The U.S. central bank also
loosened its lending restrictions.
Tuesday, Sept. 16 - The Fed steps in
Stocks saw another sharp drop on Tuesday morning as worries mounted that the financial system was
broken beyond repair. Investors poured money into bonds, and the yield on the benchmark 10-year
Treasury note fell to a 5-year low.
Next, several rock-solid money market funds began to falter, dipping below the $1 per share benchmark.
Meanwhile the Fed was scheduled to meet on Tuesday afternoon. Wall Street analysts, who just a week
ago expected the Fed to hold rates steady, began to anticipate a rate cut. But the central bank chose not
to succumb to panic and unanimously decided to hold rates steady at 2%.
Markets cheered the decision, and the Dow jumped 140 points at the close.
After the bell, British bank Barclays agreed to buy up $2 billion worth of Lehman's brokerage assets and
real estate holdings, and Morgan Stanley reported better-than-expected earnings.
But the big news came later that night when the government announced that it would stage a staggering
$85 billion bailout of AIG, and take an 80% stake in the company.
Stocks saw another sharp drop on Tuesday morning as worries mounted that the financial system was
broken beyond repair. Investors poured money into bonds, and the yield on the benchmark 10-year
Treasury note fell to a 5-year low.
Next, several rock-solid money market funds began to falter, dipping below the $1 per share benchmark.
Meanwhile the Fed was scheduled to meet on Tuesday afternoon. Wall Street analysts, who just a week
ago expected the Fed to hold rates steady, began to anticipate a rate cut. But the central bank chose not
to succumb to panic and unanimously decided to hold rates steady at 2%.
Markets cheered the decision, and the Dow jumped 140 points at the close.
After the bell, British bank Barclays agreed to buy up $2 billion worth of Lehman's brokerage assets and
real estate holdings, and Morgan Stanley reported better-than-expected earnings.
But the big news came later that night when the government announced that it would stage a staggering
$85 billion bailout of AIG, and take an 80% stake in the company.
| Thursday, Sept. 18 - The bailout With a crisis on its hands, the Fed convinced five other central banks around the world to invest a total of $180 billion in global financial markets. Meanwhile, AIG was tossed out of the Dow Jones industrial average and replaced with food giant Kraft. The stock market soared towards the close of the session, with financial stocks rebounding. The Dow added more than 400 points on rumors that an even more extensive federal bailout of the banking industry was in the making. Investors cheered early these reports that the Treasury would create an independent federal agency to take bad loans off bank of balance sheets. Late Thursday night, Treasury Secretary Henry Paulson met with Congressional leaders to hammer out the details of a large-scale bailout. |
Wednesday, Sept. 17 - Another free fall
Investors gave an enormous thumbs-down to the AIG news, sending stocks plummeting, while traders
piled funds into safer havens. Gold rose $70, a new record. Oil rose $6, its second-largest jump ever.
And the yield on the three-month Treasury sank to 0.02%, the lowest level since 1940.
The Dow dropped 450 points by the end of the day, dragged down by bank stocks in a tail-spin. Despite
reporting better-than-expected results, Goldman Sachs shares dipped below $100 a share for the first
time since 2005. Morgan Stanley took a tumble as well, as rumors circulated that it would merge with
troubled bank Wachovia.
Many Wall Street analysts blamed the stock market's collapses on so-called "naked" short sellers, who
short stocks without ever buying the security. Subsequently, the U.S. Securities and Exchange
Commission stepped in and banned naked short selling.
Investors gave an enormous thumbs-down to the AIG news, sending stocks plummeting, while traders
piled funds into safer havens. Gold rose $70, a new record. Oil rose $6, its second-largest jump ever.
And the yield on the three-month Treasury sank to 0.02%, the lowest level since 1940.
The Dow dropped 450 points by the end of the day, dragged down by bank stocks in a tail-spin. Despite
reporting better-than-expected results, Goldman Sachs shares dipped below $100 a share for the first
time since 2005. Morgan Stanley took a tumble as well, as rumors circulated that it would merge with
troubled bank Wachovia.
Many Wall Street analysts blamed the stock market's collapses on so-called "naked" short sellers, who
short stocks without ever buying the security. Subsequently, the U.S. Securities and Exchange
Commission stepped in and banned naked short selling.
Monday, Sept. 15 - The collapse
As traders sold off stocks on the weekend's dour news, rumors began to circulate that AIG was
struggling to raise enough capital to fend off a downgrade. As a result, New York Governor David
Paterson bent intra-corporation lending rules, allowing the company to loan itself $20 billion from a
subsidiary.
In the worst day on Wall Street in seven years, the Dow Jones industrial average tanked more than 500
points after Lehman Brothers' epic collapse of the buyout of Merrill Lynch
By Monday night, AIG was in fact hit with a downgrade, as Fitch bumped the insurance group down a
notch. With $1.1 trillion in assets and 74 million clients in 130 countries, investors feared AIG's collapse
would severely hurt consumers and further tighten already strangled credit.
Also Monday, news cropped up that the nation's largest savings bank, Washington Mutual was in search
of a white knight.
As traders sold off stocks on the weekend's dour news, rumors began to circulate that AIG was
struggling to raise enough capital to fend off a downgrade. As a result, New York Governor David
Paterson bent intra-corporation lending rules, allowing the company to loan itself $20 billion from a
subsidiary.
In the worst day on Wall Street in seven years, the Dow Jones industrial average tanked more than 500
points after Lehman Brothers' epic collapse of the buyout of Merrill Lynch
By Monday night, AIG was in fact hit with a downgrade, as Fitch bumped the insurance group down a
notch. With $1.1 trillion in assets and 74 million clients in 130 countries, investors feared AIG's collapse
would severely hurt consumers and further tighten already strangled credit.
Also Monday, news cropped up that the nation's largest savings bank, Washington Mutual was in search
of a white knight.
| THE 16 DAYS THAT SHOOCK THE US ECONOMY IN SEPTEMBER, 2008. A shocking series of events that forever changed the financial markets. When banks don't lend to each other and the credit system gets backed up, consumers have a hard time getting a loan to buy a home or car, small businesses can't expand and employees are at risk of losing their jobs. There are major investors, and we mean really big ones: countries, sovereign wealth funds, pension funds, hedge funds and, of course, banks. When credit is flowing smoothly, they send money between each other. They also loan money to corporations. |
Friday, Sept. 19 - The confidence boost
President Bush, with Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Henry Paulson
and SEC Chairman Christopher Cox, spoke at the Rose Garden Friday.As Wall Street eagerly awaited the
details of Secretary Paulson's plan, the SEC took what it called "emergency action" Friday morning and
temporarily banned investors from short-selling 799 financial companies.
The Treasury also said it would insure up to $50 billion in struggling money market fund investments at
financial companies, guaranteeing that the funds' value will not fall below the standard $1 a share. The Fed
also said it would make unlimited funds available to banks to finance purchases of asset-backed
commercial paper from money market funds.
In a press conference, Treasury Secretary Paulson outlined the government's plan to put up hundreds of
billions of dollars to help stem the crisis, saying "the financial security of all Americans ... depends on our
ability to restore our financial institutions to a sound footing."
Later, President Bush held a separate press conference, flanked by Paulson, SEC Commissioner
Christopher Cox and Fed chief Ben Bernanke, saying it was "essential" that the government step in to save
the economy.
Investors cheered the moves, sending stocks soaring throughout the day.
Although the U.S. government had set various bailouts in motion to the tune of roughly $1 trillion, investors
finished the week with renewed confidence that Wall Street may be broken - but not beyond repair.
--------------------------------
President Bush, with Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Henry Paulson
and SEC Chairman Christopher Cox, spoke at the Rose Garden Friday.As Wall Street eagerly awaited the
details of Secretary Paulson's plan, the SEC took what it called "emergency action" Friday morning and
temporarily banned investors from short-selling 799 financial companies.
The Treasury also said it would insure up to $50 billion in struggling money market fund investments at
financial companies, guaranteeing that the funds' value will not fall below the standard $1 a share. The Fed
also said it would make unlimited funds available to banks to finance purchases of asset-backed
commercial paper from money market funds.
In a press conference, Treasury Secretary Paulson outlined the government's plan to put up hundreds of
billions of dollars to help stem the crisis, saying "the financial security of all Americans ... depends on our
ability to restore our financial institutions to a sound footing."
Later, President Bush held a separate press conference, flanked by Paulson, SEC Commissioner
Christopher Cox and Fed chief Ben Bernanke, saying it was "essential" that the government step in to save
the economy.
Investors cheered the moves, sending stocks soaring throughout the day.
Although the U.S. government had set various bailouts in motion to the tune of roughly $1 trillion, investors
finished the week with renewed confidence that Wall Street may be broken - but not beyond repair.
--------------------------------
Saturday, Sept. 20 - The plan
Congress got the proposed legislation in the overnight hours. The bottom line: The administration was
asking for $700 billion to buy troubled mortgage assets and get the financial system flowing again.
"It is a big package because it's a big problem," President Bush told reporters at a morning news
conference. "The risk of doing nothing far outweighs the risk of the package."
The Democrats who run Congress initially indicated they were receptive to the Treasury proposal. But
as the day wore on, there was a theme sounded by the leadership.
Democrats will seek to "insulate Main Street from Wall Street and keep people in their homes by
reducing mortgage foreclosures," said House Speaker Nancy Pelosi, D-Calif., indicating her party
would seek other actions aimed at benefiting taxpayers. NEXT
Congress got the proposed legislation in the overnight hours. The bottom line: The administration was
asking for $700 billion to buy troubled mortgage assets and get the financial system flowing again.
"It is a big package because it's a big problem," President Bush told reporters at a morning news
conference. "The risk of doing nothing far outweighs the risk of the package."
The Democrats who run Congress initially indicated they were receptive to the Treasury proposal. But
as the day wore on, there was a theme sounded by the leadership.
Democrats will seek to "insulate Main Street from Wall Street and keep people in their homes by
reducing mortgage foreclosures," said House Speaker Nancy Pelosi, D-Calif., indicating her party
would seek other actions aimed at benefiting taxpayers. NEXT
President Bush, with Federal Reserve
Chairman Ben Bernanke, U.S.
Treasury Secretary Henry Paulson
and SEC Chairman Christopher Cox,
spoke at the Rose Garden Friday.
Chairman Ben Bernanke, U.S.
Treasury Secretary Henry Paulson
and SEC Chairman Christopher Cox,
spoke at the Rose Garden Friday.
THE FEDERAL RESERVE
WASHINGTON DC
WASHINGTON DC
Treasury Secretary Henry Paulson
(center) leaves after a meeting with
Congressional leaders at the U.S.
Capitol Thursday night.
(center) leaves after a meeting with
Congressional leaders at the U.S.
Capitol Thursday night.
The president, speaking in the
Rose Garden, outlines plans for
a massive package aimed at
stemming the financial
bloodletting.
Rose Garden, outlines plans for
a massive package aimed at
stemming the financial
bloodletting.
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financial life.
Setting priorities
Here's help for the first -- and often the hardest -- step in achieving your
financial goals: deciding which goals to pursue.
LESSON 2
Making a budget, saving money
How to bring your spending under control, so that you get the most out
of every dollar.
LESSON 3
Basics of banking and saving
Here's how to get the best banking services at the best price, either
online or off.
LESSON 4
Basics of investing
An introduction to making money in stocks, bonds and mutual funds
REIT'S, real estate.
LESSON 5
Investing in stocks
The market can be a great place to turn savings into wealth -- or to lose
your shirt. Here are some fundamentals of investing wisely.
LESSON 6
Investing in mutual funds
It's a mutual-fund jungle out there. Here's how to create a simple
portfolio that works.
LESSON 7
Investing in bonds
Bonds can provide a steady and reasonably secure income, while
adding ballast to your portfolio--but only if you really understand what
you're buying.
LESSON 8
Buying a home
Owning your home is part of the American Dream, but if you’re not
prepared, buying it can be a nightmare. Here are some fundamentals
for buyers and sellers.
LESSON 9
Controlling debt
You've got to know when to hold debt--and when to fold it. This lesson
shows you how to accomplish your financial goals by making debt
work for you.
LESSON 10
Home Selling
WAYS TO SELL A PROPERTY FAST AND EASY FOR THE TOP PRICE!
Selling a home is a big decision and requires a lot of work. From
getting the house ready to reviewing the escrow papers, our helpful
guide will walk you through the process of selling your home.
LESSON 11
INSURANCE
Health Insurance, Life Insurance, Home Insurance, Car Insurance
Great things to know about insurance
Buying a car, Auto loans. Great things to know:
Buying a car is like no other shopping experience. The choices seem
to be endless. This lesson helps you sort through your options.
FINANCIAL FREEDOM: A SMARTEST WAY TO PREPARE A BETTER FUTURE.
YOUR PATH TO WEALTH STARTS RIGHT NOW.
It's a fact: today, anyone can become a millionaire
– In the history of the world, there has never been
a better time to create wealth than right here, right
now in real estate.
CLICK HERE TO CONTINUE... THE 16 DAYS THAT SHOOCK THE US ECONOMY IN SEPTEMBER, 2008.
A shocking series of events that forever changed the financial markets.
A shocking series of events that forever changed the financial markets.
US ECONOMY, THE FINANCIAL SYSTEM, THE CREDIT MARKET. WHAT'S GOING IN 2008?