Will the bad financial news ever stop? A lot of people in the financial world were hoping for a much better fourth quarter after an absolutely disastrous third quarter. Well, if Monday was any indication, October could end up being a really rough month for global financial markets.
Click here to see the facts >
So much bad financial news keeps pouring in that it really is a challenge to try to keep track of it all. Greece seems to get closer to defaulting on their debts with each passing day, and it appears that Germany is not going to contribute any more bailout money beyond what they have already committed to.
Major banks on both sides of the Atlantic are on the verge of collapse, and investors all over the world are afraid that we may have another “Lehman Brothers moment” soon. Shares of American Airlines dropped a staggering 33 per cent on Monday as rumours that they will soon be entering bankruptcy swirled.
Yes, things certainly are getting interesting. Back in 2008, the governments of the western world saved the financial system with gigantic bailouts that were absolutely unprecedented. If the financial system crashes again at some point in the coming weeks or months, will the political will for more bank bailouts be there? If not, what is going to happen to the banking system?
On both sides of the Atlantic, the big banks are highly leveraged, they have taken on a ton of risk and they are very deeply exposed to derivatives. It is as if virtually nobody learned any lessons during the financial crisis of 2008. Once again we are facing a situation where if a couple of financial dominoes fall it could send dozens of others tumbling to the ground.
Some very significant things happened on Monday. But the media has gotten so used to reporting on tremendous financial instability that Monday’s events mostly got brushed to the side. Instead, Amanda Knox captured most of the headlines.
But the reality is that some really, really monumental stuff has been going down.
Lately it seems as though the Dow has been going up or down by several hundred points almost every single day, and that much volatility is not a good sign for the health of the financial system.
There are reports that Goldman Sachs may actually show a loss for the third quarter of 2011 and that yearly bonuses for employees may be slashed to next to nothing.
Normally Goldman Sachs is quite upbeat, but lately they have been coming out with some really frightening reports.
Shares of European banking giant Dexia plunged by about 10 per cent on Monday on rumours that it will soon need a significant bailout.
Shares of American Airlines fell by 33 per cent on Monday on rumours that the airline is about to enter bankruptcy.
It is being reported that approximately 240 pilots for American Airlines have retired in the last two months alone.
Overall, U.S. stocks fell by 14 per cent during the third quarter of 2011, and now the fourth quarter is off to a very rocky start.
It was revealed that Greece is not going to hit the deficit reduction targets set for it either this year or next year despite all of the severe austerity measures that have already been implemented. Needless to say, a lot of financial authorities in Europe were very displeased by this news.