If the wild swings on the stock market and the meltdown in mortgages are any indication, Wall Street and the American economy in general are in serious trouble. In a wry comment, the New York Times even posited that the lack of pointed humor about politics and the economy on the Emmy's broadcast is another measure of the darkness of the issue.
Actress and writer Tina Fey thanked NBC for sticking with her show despite the "turkey burger economy", but reality host Ryan Seacrest did not mention her recent comic portrayal of Alaska Governor Sarah Palin on Saturday Night Live because "I was told not to," he said.
While Hollywood celebrated its own, two Wall Street behemoths were busy with plans to transform themselves. In one of the biggest changes to Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night.
This is yet another in a series of recent "firsts" from the business world, and it speaks volumes to those who follow the market about how concerned the most powerful people in high finance have become.
"Goldman and Morgan's move to transform to holding companies is to get under Fed protection," said Joseph Meuse, president of Belmont Partners, an international financial consulting firm with offices in Washington, Virginia and Shanghai, China. "This move will allow Goldman and Morgan greater access to Fed emergency funds and just as important, Fed protection. It is a move out of fear, but if it works out long-term, it will give both firms great power in the marketplace. I think both firms are very concerned about the ban on short-selling not being extended [the ban expires October 2] and are taking the opportunity now to create more long term stability. There is a large belief in the States that all of the proposed changes are not enough to get out of the current situation - or they will create more issues than the solve. This will continue to hurt overseas markets including China. Investors will continue to seek safety in the form of cash."
"Cash is king" is a phrase often heard regarding issues of credit and banking, but even cash may not be enough protection as the dollar continues to slide against the euro. The Dow fell 370 points in trading today, just one more whipsaw undulation, and probably not the last.
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