EDGY MARKET MORNING Bank run redux Finance
• The big question this morning is: what will happen when the New York Stock Exchange opens? Worst case scenario: A 30 percent drop in the Dow will close the market for the day. That's unlikely—but a 10 percent drop will bring a pause in trading. Over the weekend, Lehman Brothers filed Chapter 11, Bank of America bought Merrill Lynch to stave off its coming destruction, the massive insurance company AIG is scrambling for money to stay afloat—and the Asian markets that are open today (Hong Kong and others closed for the Moon Festival, says our China expert!) opened low. The dollar got crappier against the euro and the yen. Meanwhile, in New York City, the 15,000 to 20,000 or so employees to be presumably laid off at Lehman Brothers—a certain number have to stay to deal with the wreckage—(and an unknown number of Merrill Lynch's 60,000 employees, 17,000 of whom are brokers) will cause a rippling effect through the tightly connected industries of New York City, which has already suffered through a record number of layoffs. (Wall Street workers earn more than half of all income in Manhattan, even though they make up about .03 percent of New York City's population.) Also, some really excellent office furniture is going to be sold off!
So how do we know it's bad? The front page of the Wall Street Journal's website is using a font as big as the Drudge Report right now. Republican vice president candidate Sarah Palin did not have an immediate comment about the collapse of the financial sector, but we'll stand by for her leadership in these frightening times!