Research Zeitgeist: Wall Street Sinks to Another New Low
While the auto industry remains in the glare of the headlights, it was the arrest of Wall Street icon Bernie Madoff that was the hot topic of conversation this week, bringing the current round of financial turpitude to a new low. The so-called leaders of the flailing Detroit auto companies, banks and brokerages may be accused of incompetence, even dereliction of duty, but they have by-and-large stayed within the bounds of legality – at least as far as we know to date. Still, Madoff’s descent into what could end up being the largest financial scam of all time is maybe not so surprising, being arguably just a more egregious manifestation of a culture of greed, entitlement and arrogance.
Worries over the continuing fallout of the credit crisis are again reflected in Research Recap’s most popular posts of the week. Top of the list was Standard & Poor’s pessismistc outlook for US finance companies. Losses are expected to accelerate for commercial lenders, S&P said, especially in commercial real estate.
The Bank for International Settlements confirmed what was widely surmised: that the growing prevalence of “creative” mortgages in the US explains contributed mightily to the higher rates of negative equity, delinquency and foreclosure rates than in other countries or than in prior downturns.
Matters could still get worse: despite the numerous government interventions S&P warned that the US may still be in for a Japanese-style economic “lost decade.”
And though the Senate republicans balked at a $14-billion down payment on a closeout 2008 model Detroit Bailout, outgoing Republican president George W. Bush signaled his intention to add to his legacy of government largesse by tiding the automakers over until President Barack Obama comes to save the day. That is once Obama is done cleaning up the mess Illinois Governor-for-not much-longer Rod Blagojevich left in his back yard. Looks like he’s going to need a big shovel.
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