Financial Crisis reaches new levels; Black Monday ahead?

The Federal Reserve and members of the largest banks and investment houses in the US met over the weekend to try to resolve the financial crisis of Lehman Brothers.  The plan had been to find a company willing to buy all or parts of Lehman, whether Barclays, Bank of America, Korea Development Bank, or an institution in Japan.

And what did we find out this morning?  Lehman isn't the one going to be bought ... it's Merrill Lynch.  Whoa, talk about things going from bad to worse.  No discussion of Merrill having problems until this point, and now Bank of America steps in to purchase them for $44 billion.  My guess is B of A didn't have much opportunity to do any due diligence on this purchase.  Seems like the Federal Reserve, pushing things behind the scenes, brokered this deal to avoid further problems.  Did Bank of America even want to purchase Merrill?  What in the world is happening?

The result of the feverish Lehman Brothers negotiations is the institution will file bankruptcy.  Seems the reason the Federal Reserve gave for the bankruptcy decision is they'd rather not use any additional taxpayer money to bail them out.  Thanks, I appreciate a quasi-governmental agency with no publicly elected officials deciding to implicitly increase my taxes any further for the next two decades.

So what else has been happening over this crazy weekend?  Well, seems as though insurance giant AIG is scrambling to raise cash, seeking $10 billion in fresh capital.  And guess with whom AIG is having discussions to receive money?  The Federal Reserve!  The Wall Street Journal states, "The Fed may not draw the line with AIG's request for support as clearly as it has with Lehman, distinguishing between its lending programs and the use of taxpayer funds."  Wait a second ... the Fed loans money to AIG, and where does that money come from?  A lending program?  Hmmm I wonder who funds the lending program.  I think most of you can answer that question.

Overseas, the UK's third largest package holiday tour group, XL, went bust and stranded 90,000 travelers around the world, including 20,000 in Orlando. A massive airlift is underway to bring all tourists home.  British Airways CEO Willie Walsh predicted another 30 "weak" airlines could go out of business before Christmas.

Let's see how the financial markets react to all of this today.  Strap in for a bumpy ride.