With the volatility we have this week anything I write will be out of date by the time I hit send so I’ll just hit the high points. All eyes are on the stock market this morning. Dow futures were indicating a big move lower on the open and that is what we got. After 5 minutes of trading we’re down over 500 points. Oil traded under 80 this morning on expectations of slower global growth. 3 month Libor remains elevated despite everyone’s best efforts to drive it lower.
One of the big stories of the day is that there is a proposal that will allow the government to insure ALL bank deposits. The Wall Street Journal is printing a story on it this morning, I’ve attached an excerpt from the article.
Here is the definition of volatility: in the 5 minutes it took me to write this e-mail the Dow has come back from down 700 to only down 120. Keep your seat belts fastened people…this is going to be a bumpy ride.
I’ll update as things develop.
From Today's Online Wall Street Journal
U.S. Weighs Backing Bank Debt - Removing Deposit Insurance Limits Also on the Table
WASHINGTON -- The U.S. is weighing two dramatic steps to repair ailing financial markets:
- guaranteeing billions of dollars in bank debt and
- temporarily insuring all U.S. bank deposits.
If the two moves come to fruition they would mark the government's most extensive intervention yet in the financial system, as officials ponder increasingly far-reaching measures to stem the sprawling crisis.
....
It's not clear that either idea will become reality, and U.S. officials downplayed expectations of any announcement this weekend. But as the crisis deepens and stocks continue to tumble, pressure is building on the Bush administration to find a solution that goes beyond the $700 billion financial rescue plan recently signed into law. Having the government back bank lending would effectively entail the U.S. being the backstop for the country's financial system.
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