The Super Collider: 'The End of the World'
[Le Temps, Switzerland]
Financial Times Deutschland, Germany
America's Bank
Crash: A Great Leap in the Dark
"The government and Federal
Reserve have removed the safety net … the era of proud investment banks
reigning supreme over Wall Street and bonus payouts reaching billions of
dollars a year are definitely over."
EDITORIAL
Translated By Ulf Behncke
September 15, 2008
Germany
- Financial Times Deutschland - Original Article (German)
It's a historic turning point
for the giants of Wall Street and a great leap in the dark for the financial
markets. Since Sunday, it has become clear that there will be no government
intervention to guarantee the survival of even the largest U.S. banks.
Lehman Brothers, steeped in
tradition and one of the largest investment banks in the world, will have to
file for bankruptcy after finding that no private investor wanted to take over the
crippled institution, and after the government refused to come to its rescue.
Merrill Lynch, another Wall Street giant, had to seek refuge in the arms of the
Bank of America, since it obviously no longer possessed any independent means
of survival.
The collapse of Lehman and
the fire sale of Merrill show once again just how incredibly tense the
situation is in the financial sector - despite the repeated positive rhetoric
over the past few months about how the end of the crisis had been reached.
The real shock was delivered
on Sunday, when U.S. Treasury Secretary Henry Paulson rejected calls for a
state bailout with a resounding “No.” Because no matter how gloomy the markets
and balance sheets appear - until Sunday, the financial circles had lived by the
motto that in case of an emergency, the government would open its coffers [This
is known in the finance sector as 'moral hazard'].
Posted by WORLDMEETS.US
[The
Telegraph, U.K.]
That is exactly what happened
with the rescue of investment bank Bear Sterns, which was salvaged by way of a
fire sale to JP Morgan. And that is exactly what happened just recently during
the de-facto nationalization of mortgage giants Fannie Mae and Freddie Mac. So
that was - at least according to the general expectation until the weekend -
what should have happened in the case of Lehman Brothers.
But at least for the moment,
both the government and Federal Reserve have removed the safety net, and it's
now up to the markets to work through the collapse of a bank of such size.
Whether it will succeed without leading to yet another dangerous chain reaction
of losses and bankruptcies remains to be seen. The state might nonetheless have
to come to the rescue at a later date.
Posted by WORLDMEETS.US
What is abundantly clear though, is that the era of proud investment banks reigning
supreme over Wall Street and bonus payouts reaching billions of dollars a year
are definitely over.
CLICK
HERE FOR GERMAN VERSION
[Posted by WORLDMEETS.US
September 16, 3:39pm]
