The best wrap-up of where we are now comes from outside the US of course, from Patrick Cockburn, who explains why the carnage has dropped and why it's not overall good news.
I was in Paris in December 1998 when Bill Clinton launched Operation Desert Fox, bombing Iraq for several days between December 16 and 19. On December 19, Clinton was impeached - for perjury and obstruction of justice in the investigation of his sexual relation with Monica Lewinsky. Some thought the bombing was a diversion from the impeachment charges. I read an editorial in a French newspaper about Clinton's bombing that began, "It was the most lethal blowjob in world history."
Today is the last day of Eliot Spitzer's governorship. He got cleaned out in about 48 hours. I think the stories only scratch the surface - that he was paying for hookers since college, and went after prostitution rings that he used. Just guessing. But here's the real point: he didn't kill anybody. And he didn't take thousands of people out on his way down. The obvious contrast appeared in French coverage but not here: Spitzer the money-laundering john is gone. The Iraq invader who deliberately commits war crimes is still around. Maureen Dowd is mad - but what's the use?
The big difference between 2007 and 2008 is money: bloody losses, and lots of them. The Fed put up $200 billion six days ago and offered to take any worthless crap a desperate bank still owned as collateral, or words to that effect. It guaranteed $30 billion over the weekend so JP Morgan would touch Bear Stearns with a 10-foot bowl and then buy it - for $2 a share. Bear Stearns stock was aroud $160 a year ago. Then it lost half its value by the end of fiscal year 2007, in November. Now it's down to $2. These are the crash numbers of 1929.
Was Bear Stearns the biggest, meaning the worst is over? No. Merrill Lynch's declared losses are so far $24.5 billion, Citigroup's$22.5 billion, UBS $18.1 billion, and so on. Bear Stearns was number 20. Imagine how rotten its assets are - to people who can make a professional guess at what's in them - if in 4 months they went from $80 to $2.
The world looked at the Federal Reserve tugboat with Bear Stearns in tow and jumped into the water. The best global resume was in Le Monde.
Les bourses de Paris et de Londres sont retombées à leur niveau de novembre 2005, l'indice parisien chutant de 3,51% et Londres de 3,86%. La Bourse de Francfort perdait de son côté 4,18%.You don't need to read French to see which way the wind is blowing.
La Bourse suisse baissait également de 5,02%, Stockholm de 4,07%, Amsterdam de 3,79%, Milan de 3,39% et Madrid de 2,81%.
Quant à l'indice Eurostoxx 50, qui regroupe 50 des plus importantes valeurs européennes, il reculait de 3,78%.
Au total, depuis le début de l'année, les Bourses de Francfort, Paris, Milan et suisse ont perdu plus de 20%.
Les places asiatiques n'ont pas été épargnées, l'indice Hang Seng de la Bourse de Hong Kong clôturant en chute de 5,18% et la Bourse de Shanghai de 3,6%. Celle de Tokyo, dégringolant de 3,71%, est tombée sous la barre symbolique des 12.000 points pour la première fois depuis plus de deux ans et demi. Quant à la Bourse de Bombay, elle a chuté de 6,03% à la clôture.
The only good news is the end of the fantasy that the U.S. can do any stupid thing it wants and just pile up more money. The Fed is already trying to act like an actual government. The rest of an actual public response will eventually follow. Maybe before we're all broke.
And then here are the Financial Times' headlines for tomorrow:
Scramble to calm markets
Bankers and regulators scrambled to shore up confidence in financial markets as the sudden collapse of Bear Stearns heightened fears that the credit crunch would claim more victims -
Few investors escape shockwaves
Pain expected for investors large and small
Shares plunge as market begins repricing
Lehman, UBS and other banks hit
Chaos echoes fears of worst case scenario
Cause was not predicted but many effects have been
Practised hands capture the prize
Latest deal to capitalise on rival’s collapse
Experts speculate on unorthodox measures
Expands role as lender of last resort
Bankers wonder who will be next
Comparisons to crash of 1929
Fears of cross-border European crisis grow
Questions about Europe’s readiness for crisis
Wall Street quakes as the parade passes by
‘It’s like a funeral’ inside Bear Stearns HQ
Bear Stearns: Winners and losers
Cayne, Lewis and staff all caught short