Massive Sell-off Monday? Morgan admits to bank run.

Early news from the international markets is not good this morning. The Hang Seng (Hong Kong) index is down a whopping 13% as I write this, and many other Asian exchanges are doing almost as poorly as the Yen increases in value amid volatile trading. U.S. index futures are down significant amounts, in part, as a result of this. Looks like it's going to be another roller coaster of a day here in the U.S., with European trading indicating major market declines there, as well. Read about it here: "Global Stocks, U.S. Futures Drop on Economy; UBS, Deutsche Fall."

For those wondering why Treasury Secretary Paulson and Federal Reserve Chairman Bernanke were so quick to allow Goldman Sachs and Morgan Stanley to morph into banks a month ago, the reasons are now becoming apparent, at least in Morgan's case: 1/3 of all of the money in its money market accounts were withdrawn in an investor run as we're now learning via Bloomberg.com this morning. Read about that right here: "Morgan Stanley Propped Up Money-Market Funds With $23 Billion." 

Now, I don't know about you folks, but I'm hearing stories of major retailers dropping like flies (last week it was Circuit City), and this is all going to contribute to the downward spiral in demand for goods and services.

But, perhaps what concerns me most is how this hits home within everyone's community here in the U.S. This past week, my local town government cancelled efforts to obtain badly-needed playing field space for our local high school athletic teams, after making the determination that a bond offering to raise the money was no longer appropriate. This inability to find buyers in the bond market now is affecting just about every government in the U.S. The same holds true in the Corporate bond market, as well, where GE just announced late last week that they're going to have to borrow from government funds just to support their cashflow requirements.

Yes, it does appear that things are going to get significantly worse, and for quite awhile, before we see any improvement.

Tags: Hang Seng, international economics, Japan, Morgan Stanley, the Economy (all tags)

Comments

4 Comments

The hits will keep coming...

...or, so I'm told, for at least another year or more...everyone's saying things are going to get worse...and I really don't look forward to what lies ahead with our economy as we approach the holiday season...and beyond.

by bobswern 2008-10-27 01:10AM | 0 recs
Re: Massive Sell-off Monday? Morgan admits

I expect some of the worst, from the gov't, is being held back till after the election too.  Come Jan-March, we are going to see a new age ushered in.

by Jerome Armstrong 2008-10-27 04:17AM | 0 recs
Circuit City?

I had not heard this, but what I did find in the news was that they are most likely going to downsize by 150 stores to hold off bankruptcy.

http://news.google.com/news?hl=en&um =1&ie=UTF-8&tab=wn&q=circuit +city

by kevin22262 2008-10-27 07:31AM | 0 recs
Circuit City is not doing well...Linen N' Things

already went bankrupt. Wait for more retail shoes to drop. Now the crisis have moved on from the financial sector to the retail and manufacturing sector...more problems ahead. Roubini is expecting a free-fall disaster...

http://www.rgemonitor.com/roubini-monito r/254130/bloomberg_october_23_2008_roubi ni_says_panic_may_force_market_shutdown_ friday_morning_update_markets_are_becomi ng_dysfunctional_and_sp_and_djia_futures _trading_already_suspended_today

by louisprandtl 2008-10-27 11:47AM | 0 recs

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