The Echos...
The following is an excerpt from an article of mine that recently
appeared in Newsweek. For links to this and other writings please visit River Twice Research.
There has never been a week like this!" "There is no playbook!" "The worst financial crisis since the Great Depression!" These phrases and others of equal hyperbole were repeated any number of times on Wall Street these past weeks. No doubt the drama has been spectacular. In the space of ten days, the U.S. government took over two mortgage-bond behemoths, Fannie Mae and Freddie Mac, and assumed de facto control of one of the world's largest insurance companies, AIG. Two of the oldest and most renowned investment banks, Lehman Brothers and Merrill Lynch, came to an end; Merrill was acquired by Bank of America for about $50 billion; and Lehman was forced into bankruptcy, with some of its more-valuable assets and employees picked up for pennies by Britain's Barclays Bank. Morgan Stanley and Goldman Sachs saw their stocks plummet and then boomerang back up. Global stock indices lost and then gained trillions in value, and central banks injected hundreds of billions to prevent the global economic system from freezing. To cap it off, the U.S. government announced a far-reaching plan to assume responsibility for the bad mortgages that triggered all this in the first place.
When someone shouts "Fire" in a crowded theater, the person who stands up and asks for calm usually get knocked down. That doesn't make him wrong. The suggestion that the current crisis may not be quite so critical isn't finding much traction these days, but that doesn't make it false.
