Crikey! No wonder Wall Street has started giving the boot to employees. Considering the depth of the troubles, how can Mr. Bubble honestly say that this could have happened to anyone? A few billion, ehhh, maybe, but hundreds of billions down the drain? Keep watching Paulson, a former Wall Street guy, to see if his tone changes on the government reaching out to help his old pals.
Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up.How many more expensive failures will Bush leave after his eight years? What a costly experiment with Republican control in Washington.
Merrill Lynch said yesterday that it would take a charge for mortgage-related securities on its books that is $3 billion more than the $5 billion it expected just two weeks ago. And a report from the National Association of Realtors showed that sales of existing homes in September fell twice as much as economists had expected, to their lowest level in nearly 10 years.
Stocks fell sharply early yesterday on the news, with the Standard & Poor’s 500-stock index falling 1.8 percent before recovering in the afternoon. Investors also bid up Treasuries as they sought the safety of government-backed debt.
At this juncture, economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion.
