There's more financial news this Sunday night than on most weekdays.

[randomness]

Lehman Brothers looks like it's going to file for bankruptcy tonight.

Merrill Lynch is selling itself to Bank of America to avoid a similar fate.

American International Group has asked the Federal Reserve for a $40 billion loan.

It's the phase of the moon! :) Or the phase of the business cycle, anyway.

Comments

[r-ness.livejournal.com]

It's true that if WaMu goes bust, the FDIC will likely run through its $45 billion deposit insurance fund paying out deposits they've guaranteed.

But if the FDIC runs out of money, they just fall back on the $70 billion credit line they have with the Treasury. If they look like they're going to run through that, the Treasury can raise the FDIC's credit line. And, of course, the Treasury cannot run out of dollars, as they can simply inflate their way out of the problem by issuing more debt. Ultimately, this becomes a problem, but it does backstop the deposit institutions. (Well, I suppose they could raise taxes. Stop laughing. :) )

Given the choice between a bank panic and inflation, the precedent is that the government will go with inflation. Arguably, this is even the right choice. In any case, it's fairly clear that they'll hand you back your money and keep their promise, even if they have to print it just for you.

I'm sure that's reassuring.

[meepodeekin.livejournal.com]

Yep, thanks. I feel waaay better now. :)

And thanks for the links.