I do not think people realized how close we were to a collapse of the financial system last Friday, July 11. In all my years covering markets, it was the only time I remember that a flight to safety entailed selling Treasury bonds. Within eight hours, stocks of Fannie Mae and Freddie Mac swung 50% down and back.
At noon I called a bond trader to ask him how the market was. His answer: "Have you seen anybody jumping off the window yet? I am just waiting for that." It was that bad.
Wall Street's rumor factory was working at full-throttle and that same day I heard that HSBC was about to buy Lehman Brothers for a symbolic US$5 and that the US Treasury itself was at risk of being downgraded, something that would really make 1929 look like a walk in the park.
Adding injury to shame, that day the FDIC took over Indy Mac, the second biggest Alt-A mortgage lender.
I thought I would wake up Monday morning to see huge lines outside the banks. I did not. Apart from those at Indy Mac, the only lines in banks were the usual ones.
So, apparently Henry Paulson and Ben Bernanke guided us through what could have been the ultimate debacle of the US financial system.
But have they really?
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2 comments:
Have they really avoided us to be out of breath???After all , I read it in one gulp.Pretty intriguing, Mr christopher and pretty well put.
One thing it´s true, once more we've realized what an endless circle we've been surviving. But for sure what we have to do is to go on and on, and leave our mark in everywhere we go. Very well written, Mr.! See you around! Lu.
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