Reenita's Wisdom

The failure of Lehman Brothers is seen as the last straw that broke the credit market. Did Paulson make a big mistake?

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Everyone is petrified of losing even more money than they have already lost. Yes, I mean even more, because I do not think that that there is anyone out there who has not lost something in this crazy whirlwind of stock market yo-yo-ing lately. And by anyone, I mean the average Joe out there…I am not referring to ex Lehman folks who have lost all of what they worked for these last several years, or the Morgan Stanley/Goldman Sachs folks who seem to be following in footsteps of their cousins at Lehman.

The good news is that according to Ron Lieber, NYTimes money guru, some investments might just be safe. “Banks like HSBC Direct and Capital One are offering online savings accounts paying more than 3 percent,” says Lieber. “These accounts have all the normal Federal Deposit Insurance Corporation protections of at least $100,000. Also, the Treasury Department is currently insuring investors who had holdings in money market mutual funds as of Sept. 19, as long as the fund company pays to participate.” (NYTimes.com: Your Money, September 29 2008)

The bad news is that when it comes to investing in stocks….or wondering which stocks are going to hold up…hmmm well don’t hold your breath on that one!

Now might just be the time to think greener when it comes to your investment strategy than you have before. The U.S. Senate just passed, at long last, extensions of crucial renewable energy investment tax credits and other goodies to goose green tech, such as a tax credit worth up to $7,500 for buyers of plug-in electric cars. Solar projects, for instance, would qualify for a 30% investment tax credit through 2016.

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A green credit crunch?

Is my money safe? And other questions to ask

It’s official, according to the New York Times, the bailout proposition has been rejected by the House of Representatives. The Dow Jones just plunged more than 400 points and America is standing up for itself as the bastion of free market economics!

According to the New York Times, “supporters of the bailout proposal had argued that it was necessary to avoid a collapse of the economic system, a calamity that would drag down not just Wall Street investment houses but possibly the savings and portfolios of millions of Americans. Opponents said the bill was cobbled together in too much haste and might amount to throwing good money from taxpayers after bad investments from Wall Street gamblers.”

Ironically though most Californian democrats have been up in arms about the Fed bailing out the financial industry with taxpayer dollars, the vote to decline it has been purely republican! We are back to the essences of what the fiscal conservatives actually stand for. Even the bailout plan promised relief in the short term, its sustainability over the long term has been seriously questioned by many. As House Representative, Steny Hoyer says, “When it comes to America’s economy, none of us is an island.” The last thing we need is more of a domino effect on the economy.

Wachovia has just managed to save itself from the fiasco by selling tis assets to Citigroup. But as usual, the word on Wall Street is ‘Who’s next?” These last few days there has been speculation that Goldman Sachs would be severely impacted….negatively that is…if the bailout plan did not go through. Don’t you think it is interesting then ‘King Henry’ Paulsen was adamantly pushing the plan….after all he is Goldman Sachs alum!

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To Bailout or Not to Bailout: Is Free Market Economics Sustainable?
Death of Wall Street, Rise of Main Street
Financial Crisis: What Will The Collapse of Investment Banking Mean for CSR?

Photo credit: Google

The beginnings of another new economy are taking shape as Morgan Stanley and Goldman Sachs prepare to close the curtain on investment banking.

Mitsubishi UFJ Financial Group Inc., Japan’s largest bank, will inject 900 billion yen ($8.4 billion) into Morgan Stanley to help it transition to a bank holding company. Goldman Sach’s strategy is slightly different albeit with the same ultimate objective i.e. to become a commercial bank. According to Bloomberg, Goldman already has in excess of $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S.

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