Goldman, Morgan Scrap Wall Street Model, Become Banks in Bid to Ride Out Crisis:
"It had become increasingly clear to Fed officials in recent days that the investment-banking model couldn't function in these markets. Investment banks depend on short-term money markets to fund themselves, but that had become increasingly difficult, particularly in the wake of the collapse of Lehman Brothers. As bank holding companies, Morgan Stanley and Goldman Sachs will be allowed to take customer deposits, a potentially more stable source of funding."
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The ascendancy of commercial banks largely reflects their use of customer deposits to fund much of their business. Retail depositors tend not to yank their money out, even in turbulent times, thanks to backing by federal deposit insurance. Even at Washington Mutual Inc., a Seattle thrift-holding company battered by mortgage losses, deposit levels are basically unchanged so far this year
FT.com / In depth - Stocks soar on rescue hopes:
"...The US Treasury said the meeting discussed a “comprehensive approach to address the illiquid assets on bank balance sheets that are at the underlying source of the current stresses in our financial institutions and financial markets.......Treasury and Fed officials discussed the idea of creating a government-sponsored vehicle to deal with toxic assets......it appears that the terrifying events of the past week may have changed the political landscape so profoundly as to make RTC-type legislation possible......Many expect further giant liquidity operations in the coming days. “It really felt like we were teetering on the brink of absolute disaster yesterday and it was still pretty grim at the start of today,” said a senior liquidity manager at one large European bank."
"Fed and Treasury officials have identified the disease. It's called deleveraging, or the unwinding of debt. During the credit boom, financial institutions and American households took on too much debt. Between 2002 and 2006, household borrowing grew at an average annual rate of 11%, far outpacing overall economic growth. Borrowing by financial institutions grew by a 10% annualized rate. Now many of those borrowers can't pay back the loans, a problem that is exacerbated by the collapse in housing prices. They need to reduce their dependence on borrowed money, a painful and drawn-out process that can choke off credit and economic growth."
Firedoglake
"This has been coming for a long, long time. For years Wall Street made record profits, many multiples of GDP growth and higher than other industries' profits. What they were doing is using heavy leverage, ignoring actual default risk, assuming that housing prices would always rise, and booking future profits in the present as income. Imagine if you could say 'well, I think I'll make 1 million over the next 10 years, so I'll just sell that money to investors now, pay them later, and book the sale price of 900K this year.' Works, till it doesn't."
Crisis on Wall Street as Lehman Totters, Merrill Seeks Buyer, AIG Hunts for Cash - WSJ.com:
"Monday will be a day of reckoning for the financial markets,' said Carlos Mendez, senior managing director of ICP Capital, a boutique investment firm in New York. On Sunday, he said, 'it was like a fire alarm went off and people ran in all directions."
I watched the towers fall from the corner near 90 Morton Street in the City
View Larger MapAlso, from my original pre-blog website of the time.... Click Here
View Larger MapAlso, from my original pre-blog website of the time.... Click Here
"As economies slow, credit deterioration is widening and deepening, and as banks deleverage and rebuild capital, lending is beginning to be squeezed, restricting household spending and clouding the outlook for the real economy,"
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The fund urged U.S. authorities to examine further the business model of Fannie and Freddie "when conditions stabilize."
This is interesting... Best Buy getting into the market.... Hopefully their customer service in this area would be as good as the local little guy with better stock availability. My biggest problem with the local music shops is they have very little variety and depth of stock. My problem with the guitar center chain is they're very uneven across their stores in knowledge of the product.
Also, how will Best Buy ensure knowledgeable staff? Will they do Lessons? Rentals? Will have to wait and see.
I placed an order for Carvin SH575 back in March (3/14/08). It's running weeks late, but at least these video's give me something to tide me over till it shows up. The SH575 looks like it's going to be a great guitar.... Here' hoping!
