On Wall Street A Week Like No Other

I remember that only couple of months ago some market commentators opined that maybe things have bottomed out and Wall Street was beginning to recover from its self-inflicted wounds. Things were supposed to get better. Then something unprecedented, or as some called it, "a seismic event," shook the markets as the federal government took over Fannie Mae and Freddie Mack and the two giants went into "conservatorship." This was probably the most massive governmental involvement in the private domain as of that date. That was only two weeks ago.

To be honest, at the time I did not believe I will see anything matching in significance (at least for a while). However, this past Monday things got even crazier on Wall Street and both Lehman Brothers and Merrill Lynch (former Wall Street’s icons?), crumbled on the same day. Lehman filed for bankruptcy and Bank of America bought Merrill for $50 billion. Events seemed out of control. Rumor had it that AIG was on the verge of collapse and only a day later it was official – AIG was to be bailed out by the Feds for a price tag of $85 billion which was to give the Fed about 80 percent interest in the world's largest insurance company (sorry, formerly largest). In just a few days the landscape of global finance changed. As Steven Davidoff pointed out, in the matter of weeks the US government became the guarantor (in one form or another) of the entire financial system. As I was just beginning to get bored with the presidential elections (and all the Sarah Palin news coverage), Wall Street once again provided a shot of adrenalin. But this is not your usual shake-up. This is going in the history books. Now all eyes are on the Fed and Henry Paulson. And it promises to be a wild ride.