September 15th, 2008
10:38 AM GMT
LONDON, England - Those of us who work in financial journalism have a slightly frazzled look about us today. It's been the most extraordinary weekend as Hank Paulson and Wall Street's top executives desperately attempted, and ultimately failed, to breathe life into ailing Lehman Brothers. I've experienced nothing like it in my 25-year career.
The demise of Lehman Brothers, the fire sale of Merrill Lynch – the next potential domino in the chain – and news of serious problems at insurer AIG have sent shock waves around the world. Three of the top five U.S. investment banks have now fallen victim to the credit crunch. These really are seismic events. As one commentator put it: "Tectonic plates are shifting under the foundations of the U.S. financial system," and we're all likely to feel the ground shake.
In London, the FTSE 100 index of leading shares fell nearly 3 percent in the first few minutes of trade. With the dollar tumbling both the Bank of England and the ECB said they would intervene if necessary to bring stability to the currency markets.
Our old friend David Buick of BGC partners, says the mood today on the trading floors in London is grim.
It's not so much the demise of Lehman Brothers that has sent shock waves through the City, but Hank Paulson's refusal to use public funds to sweeten any rescue deal and the realisation that we're still some way from finding out just when the cycle of huge write downs and failures will end.
Confidence, he says, is shot to ribbons. And after this unprecedented roller coaster of a weekend, so am I.
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