'The World As We Know It Is Going Down'
By Marc Pitzke in
09/18/2008 12:44 PMUS FINANCIAL CRISIS
Panic is the word of the hour on Wall Street. Now even
Morgan Stanley is fighting for survival. The commercial bank Wachovia and
For traders, now might just be the worst of times. The original plan actually called for humor. On Wednesday evening, actress Christy Carlson Romano was supposed to ring the closing bell on the floor of the New York Stock Exchange (NYSE) to mark her debut in the Broadway musical "Avenue Q." She plays two roles on stage -- a romantic kindergarten assistant, and a slutty nightclub singer.
After that day on the floor, the stock traders could have used a bit of comic relief. But it was not to be. Instead of Christy Carlson Romano, a NYSE employee in a joyless gray suit stood on the balcony and silently pressed a button. The bell rang and he disappeared. No waving, no clapping, none of the usual jubilation.
By the end of Wednesday, no one here was in the mood for
laughter. The bad news on Wall Street was coming thick and fast. All the
Investors were turning their back to the market in droves and fleeing to safer pastures. The price of gold broke its record for the highest increase in a one-day period.
Panic Is the Word of the Hour
Traders abandoned the NYSE temple visually defeated and immune to the TV crews waiting. The disastrous closing prices were flickering on the ticker above the NYSE entrance: American Express -8.4 percent; Citigroup -10.9 percent; JPMorgan Chase -12.2 percent. American icons, abused like stray dogs. Even Apple took a hit.
"I don't know what else to say," stammered one broker, who was consoling himself with white wine and beer along with some colleagues at an outdoor bar called Beckett's. Ties and jackets were off, but despite the evening breeze, you could still make out the thin film of sweat on his forehead. His words captured the speechlessness of an industry.
Things got worse after the markets closed. Washington
And then came the announcement that would dominate all of
Thursday's market activities: Morgan Stanley -- the venerable Wall Street
institution and one of the last two
"Folks," economist Larry Kudlow, a host on the business channel CNBC begged his viewers that evening, "don't give up on this great country!"
End of an Era
In fact, it really does look as if the foundations of
"Nothing will be like it was before," said James Allroy, a broker who was brooding over his chai latte at a Starbucks on Wall Street. "The world as we know it is going down."
Many are drawing comparisons with the Great Depression, the national trauma that has been the benchmark for everything since. "I think it has the chance to be the worst period of time since 1929," financing legend Donald Trump told CNN. And the Wall Street Journal seconds that opinion, giving one story the title: "Worst Crisis Since '30s, With No End Yet in Sight."
But what's really happening? Experts have so far been unable to agree on any conclusions. Is this the beginning of the end? Or is it just a painful, but normal cycle correcting the excesses of recent years? Does responsibility lie with the ratings agencies, which have been overvaluing financial institutions for a long time? Or did dubious short sellers manipulate stock prices -- after all, they were suspected of having caused the last stock market crisis in July.
The only thing that is certain is that the era of the
unbridled free-market economy in the
The most breathtaking aspect about this week's crisis,
though, is that the life raft -- which
"I fear the government has passed the point of no return," financial historian Ron Chernow told the New York Times. "We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams."
Bush Cancels Trip
The situation appears to be so serious that George W. Bush
cancelled two domestic trips he had planned for Thursday on short notice.
Instead, the president will remain in
So far, the
Republican Party presidential candidate John McCain had the
most to say. On Monday, he said "the foundation of our economy" was
"strong," adding that he opposed a government-led bailout of
But Democratic presidential hopeful Barack Obama didn't move past superficialities, either. "We're Americans. We've met tough challenges before and we can again."
What else are they supposed to say? After all, US presidents
have very little influence on stockmarkets. And Wall Street is expecting the
status quo for the next president. On Wednesday an almost palpable mix of
tension and melancholy filled the air above
At the side entrance to Goldman Sachs on
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