I've been away on vacation for a couple of weeks, came back home and ended up sick at home for a week and a day at the ER. While I was on vacation, the following major events happened:
1. Lehman filed for Chpt. 11.
2. Merrill Lynch is sold to Bank of America
3. AIG is tanking and received an $85 billion loan from the Fed
4. Washington Mutual - making it the world's largest savings and loans failure in US history.
This is some scary stuff that is happening to our economy. What makes it worse is that I do not think we have bottomed out. 3 of the 5 largest investment houses failed in less than 6 months (Bear, Lehman and Merrill), the largest insurance company (AIG) needed financial assistance and the we had the failure of the biggest savings and loans instituation (WaMu)- all in a matter of 6 months! When events like these occur, there are ripple effects. I was talking with several of my friends who are in the real estate industry and they recently attended a conference about a month ago. They told me that there are still plenty of home out there that are not officially "foreclosed" yet; however, are at the brink of foreclosure. This means there is more to come. I think there is still more downfall left until we have officially bottomed out.
Which is the next investment house to fail? 3 of the 5 largest could not make it. Who's next for 2008 and through 2009? Goldman Sachs? Morgan Stanley?
WaMu failed. Who's next?
Did the Fed take too much on their plate by taking $30 billion of Bear Stearn's securities, Fannie Mae & Freddie Mac, and now by taking ownership and control of AIG by lending up to $85 million?
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