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Financial Rollar Coaster Continues
Financial sector is in trouble again today, the Dow Jones industrial average down 460 points. The Standard & Poor’s 500 index has fallen 54 points, and the Nasdaq composite index fell 74 points. The big news makers are Lehman Brothers, Merill Lynch, Bank of America, AIG, and the Fed buy up of $70 Billion in mortgage-baked repos.
Last week we discussed the Fannie & Freddie Bailout and in my opinion it was a necessary move by the Treasury but a move that would only maintain the status quo not improve the "credit crunch" or "mortgage meltdown" situation.
Today a few things have happened to strengthen that opinion, the Fed has fulfilled $70 Billion in mortgage-backed repos of the $173 billion in mortgage-backed repos out on the market. Lenders are still not seeing interest in mortgage-backed securities because of global concerns with the US financial industry and with todays news the Feds may be stepping up to buy more of these repos in the not too distant future. Lehman Brothers is looking at bankruptcy and Merill Lynch is being gobbled up by Bank of America at $29 a share, equating to $50 billion in stock.
Finally, AIG is looking to do ... more
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