The Financial crises continues

I reproduce my comments from June 21, 2008 made to this group.

"Today Bear Sterns has gone under, Lehman brothers is a candidate to go under and Citibank and Merril Lynch are tottering to save themselves. The CEOs of these and most other financial institutions have been fired. The share prices have been halved and the bad news every quarter continues to surprise every one by its severity."

Today Lehman is desperately looking for a bail out, just two months after I identified it as being bankrupt. Freddie Mac and Fannie May have been nationalized.

In the last twelve months Lehman has gone from $ 60 to $4. Merril from $ 70 to $ 18 and Citi from $ 45 to $ 18. A new company is showing signs of distress which was not on my list and this is AIG, the world largest Insurance company.
AIG has gone from $ 60 to $ 12. Washington Mutual has gone from $39 to $3.

The question my daughter used to ask when ever we took a trip was " are we almost there?" My answer would be for the financials not by a long shot. The Government was hoping that after the Bear Sterns bailout there would be no more. Then came Freddie and Fanny and now Lehman looms on the horizon with possibly Merrill to follow. The degree of denial within the administration as to how serious this crises is, is phenomenal. A Republican administration whose ideology is to let the market forces take their victims is bailing out Financial Institutions right left and center.

Bear Sterns and Lehman were not fly by night institutions. Bear Sterns was founded in 1923 and Lehman in 1850. These were venerable institutions who fell prey to the greed of the market place. While the war on terror is taking a toll of the US Overseas, Runaway Capitalism is eating away at it's innards. November seems very far away to wait for a change of Administration but what if the Presidential candidates are equally living in the last century?

No body seems to recognise that the values that this country was founded on
have been thrown out of the window in the interest of showing short term results for major corporations. Nobody seems to realize that a whole new world has emerged outside the shores of the US which is not beholden to the US and which is getting ready to drop its dependence on the US as fast as it can. If you don't believe me read Fareed Zakaria, " The post American world", read Naomi Klein's, " The rise of disaster Capitalism".

If any one thinks that taking over Financial Institutions with taxpayer money or replacing Chief executives is the answer, then we are looking at throwing billions of dollars down the drain. The system is broken. The checks and balances are not working. Fraud has become systemic, the regulators have become part of the problem. Every day the US is beginning to look like a third world country. Governance has become the big issue.

There are plenty of red flags blinking all over the Economy but a state of emergency has not been declared. if it was how would we pursue the so called "war on terror", how could we stand up to the Russians, how could we justify attacking Iran? How can we pretend that we are still in charge?

Khusro