Financial Betting Articles

What happened this weekend? What happened this weekend to make the BBC Business Editor say "There has never been a weekend like it in my 25 years as a financial journalist. For Wall Street, it has probably been the most extraordinary 24 hours since the late 1920s." (He can presumably be found teetering on a ledge in downtown Manhattan...?) (As an aside, a friend of mine was recently trying to convince me that nobody actually jumped out of any windows during the Wall Street Crash. It was, instead, a man changing a light bulb who then fell off the ledge. But it was a good story and it stuck...Can we expect more people to, ahem, be changing light bulbs in the near future...?) (Sorry about all the brackets.)

OK, back to the piece.

The extraordinary events? Lehman's have gone to the wall and Merrills have fessed up that they don't want to go it alone and have accepted the safe harbour of Bank of America. Is this the end of investment banking as we know it? More of that another time.

But what we can say is that Henry Paulson - who I believe history will judge very kindly when they sift through this rubble - has decided that it is time to draw a line in the sand.

Saving Bear Stearns was meant to head off a greater decline. Taking in Fannie and Freddie was a no-brainer and a no-option-but-to. Lehman's is bigger than Bear Stearns but Paulson said no to underwriting it's toxic balance sheet.

Why?

Because the wolves are on the prowl. If Lehman's was underwritten then who else would be putting out the begging bowl. Every bank on Wall Street. (Do we really believe Merrills wasn't watching the decision from the edge of it's window ledge?) And then the airlines would have demanded more of the same. And let's not even consider what GM and the rest of the car industry was about to beg for.

By slapping down this unruly pup Paulson has stopped the clambering in one go.

And can you imagine what the markets would have made of Paulson singing a blank cheque for every listed company in the S&P? It would have been the death of the dollar, the death of US economy, the start of a global meltdown.

Now the US banks know there is no shining knight and that they'd better get their houses in order. God knows they've had enough time and enough warning.

Bernanke and Paulson. Quite a team. But not a patch on King and Darling.*

*Obviously I don't mean a word of that last remark and I apologise for the distress caused to anyone momentarily considering the possibility that I did.

Last Monday the FTSE had its biggest one day rise since Jan, closing 205.6 points ahead

Wall Street has risen by 197.12 points in the last week

The DAX fell by 27.45 points in the last week

All of the clocks in the movie Pulp Fiction are stuck on 4:20

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