After more than a year of this ‘credit crunch’, you would think I’d be used to it by now.
Not this week.
Lehman Bros files for bankruptcy
Merrill Lynch sold in $50bn deal
HBOS confirms Lloyd’s merger talks
All the above are news stories on the BBC business page, this very minute. With the $85bn (I have that much sitting in my wallet) bailout of AIG following the US government’s buyout of Fannie and Freddie, the US government now owns 3 of the largest financial institutions in the world. Incredible. Don’t forget all the American taxpayers’ money in Bear Stearns also – JP Morgan only have a $1bn first-loss piece of the transaction; after that is used, the taxpayer fronts the bill.
So now for the participation – who’s next? I’ll narrow down your options; Lloyd’s is expected to announce a takeover of HBOS at 7am tomorrow (Wednesday 18th Sept), so any other establishment beating HBOS into a takeover or administration would need to move very fast. Morgan Stanley’s share price is dropping sharply (44% so far today, after a 46% fall this year), and Goldman Sachs isn’t far behind it. They remain the only two surviving large independent brokerage houses (after the demise of Bear Stearns, Lehman Bros and Merrill Lynch) without retail operations (high street banks). Reuters have reported that Morgan Stanley are considering a merger.
These are some of the world’s biggest financial institutions, crumbling into pieces over the space of one week. Astonishing. Don’t forget that Northern Rock’s downfall was nearly a year ago, and the monolines were downgraded six months ago – see my previous post for more information on that.
A small banking tip – if you bank with Halifax, your money is safe. Only old crazy people store their money under the mattress.
*edit*
It’s 2am, about 6 hours after I posted this article originally. The updates are that Lloyds are merging with HBOS in a £12m deal, and Morgan Stanley are in takeover talks with Wachovia. Plus, I forgot to mention earlier that Russia suspended its stock market due to its poor performance. All in a days work in the finance industry.
