Another day in Paradise... by Milota Sidorova

Critics do say it’s been the worst week on Wall Street since 9/11 2001.
However, slightly remaining of a song – one by one, you watch them fall...that’s the exactly a description of what’s been going in American Market.
We do remember Bear Stearn’s buy out just several months ago, then Freddie and Fannie crisis, soon after surprising Lehman brothers’s bankrupcy, Merrill Lynch resurrection as well as AIG case. Some say America didn’t have a free market policy anymore.
FED had has some busy days.

Almost 1.6 million applicants all over the world now have a reason to be more concerned. As AIG representatives announced its executive problems that almost lead into bancrupcy, its shares immediatelly dropped 60 percent. And just few hours after FED has denied Lehman Brothers’s call for help, AIG has taken part in the very same dialogue. However, this time with relatively happy end. FED asked Goldman Sachs (GS.N) and JPMorgan Chase (JPM.N) to lead a lending facility of $70 billion to $75 billion for the insurer.

Nobody’s sure whether those amount will be enough for the world‘s biggest insurance group.
Moreover, Goldman’s stocks dropped 24 percent overnight. The safety on the buyer has been discredited. The question also remains the amount provided to troubled AIG. In fact Bear Stearns pumped up nearly $300 billion and Freddie and Fannie received $100 billion each one.

As announced just after FED offered its help to the first one, lobbying pressure has tighten in Congres. One might logically ask why did FED rescued AIG when let scuttled down one of the biggest American banks with an almost 160 years of tradition.
According Tim Backshall (Credit Derivates Research) as reported by Bloomberg television this morning it was more of an ethical issue. The key factor has actually been volatile Contemporary risk and world scale size. Because Lehmans kept its Contemporary risk relatively balanced nobody was gaining neither loosing significantly. AIG on the contrary was in bigger troubles. Its CR has jumped up to 400 percent during past week. And because it’s been bigger fish in the sea, caping most of American and European Banks and Insurances, the consequences should have been far more destructive.
They were too big to let them crash down with no harm.

Local representatives all over the world try to assure mortgage or loan owners to keep relaxed. American branch was distant enough to impact their yields. There’s still no reason to panic. At least be more considerable. That’s what you can hear from every possible interview.
However, it still seems it can’t satisfy everyone. The switching off the contracts keeps continuing.

AIG crippling certainly has long scale consequences. The press is overload by British HBOS case. Almost all world markets reported extreme volatility.
Is this how does the one serious chapter end? How disasterous this will be for tax payers? Wall Street is about to rewrite its history...



related story: http://www.forbes.com/fdc/welcome_mjx.shtml

by Milota Sidorova for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.<br><br><font size=2>These news are original content from young talents around the world and are selected for you by Chris Cantell.</font><br>

edited by Beata Biskova