Cat 4 hurricane heads for Wall Street

By Jay Bookman | Sunday, September 14, 2008, 05:55 PM

The Atlanta Journal-Constitution

The next 24 hours are going to be very interesting in the financial markets, to say the least. Lehman Bros., the nation’s fourth largest investment bank, is going down the tubes. The federal government is refusing — appropriately — to bail it out, and major private financial institutions have reportedly balked at trying to save it, afraid of being dragged down into the whirlpool themselves.

Alan Greenspan sounds downright grim:

“First of all, let’s recognize that this [the financial crisis] is a once-in-a-half-century, probably once-in-a-century type of event…,” Greenspan says. “There’s no question that this is in the process of outstripping anything I’ve seen, and it still is not resolved and it still has a way to go.

“I can’t believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring,” Greenspan said.

The AP reports that “Lehman’s collapse would have an incalculable impact on the financial markets, and would likely have a domino effect, with Merrill Lynch and the American International Group (AIG) widely cited as firms most at risk.”

Bloomberg News reports that “the government is probably concerned that panic may spread to other financial institutions, Ladenburg Thalmann & Co. analyst Richard Bove said. American International Group Inc., the largest U.S. insurer, and Seattle-based lender Washington Mutual Inc. each plummeted in New York trading last week on speculation about their financial health.

In London, SkyNews — a Rupert Murdoch outfit, so take it with a grain of salt — posts a headline reading “Bank Collapse Catastrophe Warning: The possible collapse of one of world’s biggest investment banks could be “catastrophic” and lead to the “implosion” of the banking sector, Sky sources say.”