It's the Economy Stupid Tuesday

I thought with what was going on The Street this week that I should bump up my post a day. I will update it tomorrow probably with what impact this is having on campaign 2008.

I don't know what I could possibly add to what has been going on Wall Street other than the people on CNBC are very bullish and always seem to never ask a tough question, especially of CEOs. (Why should we trust anything out of the mouth of the CEO of Bank of America, who is still sticking by his assertion that BofA's buy out of Countrywide was a fantastic move for his company?) I am still waiting to hear back from a friend in Manhattan when he has a chance to come up for air for some expert analysis, but for now here is what we know a day after everything went down on Monday morning.

Lehman Brothers, which had survived the the railroad meltdowns of the 1880s, two world wars, and a little thing called the Great Depression, filed for Chapter 11 bankruptcy after this couldn't find a buyer over the weekend.

Merrill Lynch was purchased by BofA in what will probably be a great deal for both companies. (I bet Merrill will spun off within the next decade. If John Thain gets a golden parachute it will show how tone deaf Wall Street is to the rest of the country. I would double down that he will get a giant package if he isn't kept on at BofA. With his adept management skills, though, I bet BofA will keep him on board. My friends, that's sarcasm I can believe in.)

AIG is an important worldwide institution, but is teetering on the edge of filing for bankruptcy unless Godlman Sachs and J.P. Morgan can come up with $70-75 billion safety net to keep AIG afloat. The Fed isn't going to directly infuse cash, but is broadening lending practices enabling its subsidiaries to use their equities as collateral.

Goldman's earning came in way below expectations this morning. The Street is not happy with this, though I hope that the company is not severely punished.

Wachovia and Washington Mutual banks are green around the gills.

While we are letting the market forces work, can we let some of Detroit fail as well? Let's just rip this band-aid off in one hard pull. I bet a foreign company would love to come in a buy their plants in this country and build cars here instead of importing them.

The Fed is meeting this week to discuss interest rates. I hope they stand firm and keep them at 2%.

In a bit of good news, crude oil prices are now hovering just about $90 a barrel. Not sure exactly what market forces are bring down prices at the moment, but even though I don't own a car or drive very much I hope that this is helps to keep commodity prices down.

If you need a little levity for all this bad news from Wall Street check out this video:



_John

image: "Domino Theory At Work" from flickr rosendahl