Watching the Global Meltdown of Wall Street
Another Gloomy Day on Wall St. Countrywide Falls 28 Percent After Bankruptcy Buzz
By Neil Irwin and Carrie Johnson Washington Post Staff Writers Wednesday, January 9, 2008; D01
Shares of Countrywide Financial, the nation's largest mortgage lender, plummeted yesterday on rumors, which the company denied, that it was contemplating a bankruptcy filing. The drop came on yet another bad day for the stock market, which has been off to a terrible start for 2008.
The Dow Jones industrial average was off 238 points for the day, a 1.9 percent drop; the tech-heavy Nasdaq Stock Market was down 2.36 percent. The broad-based Standard & Poor's 500-stock index, which dropped 1.84 percent, has fallen four of the five trading days in 2008 and is down 5.4 percent. It is off more than 10 percent from its high in October, the definition of a market correction.
The New York Stock Exchange halted trading in Countrywide to stop panic selling, and the company issued a statement saying "there is no substance to the rumor that Countrywide is planning to file for bankruptcy." Shares ended the day down 28 percent, at $5.47.
You can file that "no substance" statement in the same category as "the insurgency is in its last throes" and "I have complete confidence in Alberto Gonzales."
All of NetBank and parts of Wells Fargo and Bank of America, head the list of some 212 financial entities that have 'imploded' since late in 2006. During that fabled year, before the mortgage fraud bubble finally burst, Countrywide issued about a fifth of U.S. home loans in terms of dollar amount.
What did these storied 212 have in common? The all denied rumors of their demise as they grabbed a cab to bankruptcy court.
There's a year and ten days left before George Bush grabs his own cab back to the soft pillow and beloved cat he should never have left back in Texas to connive himself a presidency.
While you can't bank on the banks anymore, you can bank on the fact that GB will pull all the stops in order to prevent a crash on his watch.
Concurrently with the real-estate bubble, you and I have front-row seats to the Bush Presidential Bubble and the only drama is in whether it will burst before or after he leaves office.
Either way, it's gonna be a big bang and he'll have to contemplate his legacy through the bubble-gum splattered all over his face.
As always, the bill for peeling it off will be delivered to the taxpayer. The smallest part of that, the tippy-tip of the iceberg, will be bailing out the failed banks. I would remind those of you who are FDIC insured, that the Federal Deposit Insurance Corporation is--you.