Capsules from global media reports about impacts of the developing financial crisis.
KEY POINTS:
Michael West in The Sydney Morning Herald:
Full report
"The implications of the present crisis for any company with high debt levels or a large derivatives exposure are unpalatable. These will be shorted by the hedge funds, again. There is now a 'flight to quality'. Until confidence is restored in the banking system, anything with the smell of leverage will get smacked hard.
You can say goodbye to Babcock & Brown, whose stock price has just been cut in half again this morning. Other heroes of the bull-market Allco, Centro, Rubicon, MFS - all gone now if they weren't before. Anything too highly-leveraged is at risk. Too much can go wrong. Too much is unknown."
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Bonnie Chen in Hong Kong's The Standard:
Full report
"As fears mounted that US insurance giant AIG may face demands to produce US$20 billion (HK$156 billion) after a string of credit-rating downgrades, Financial Secretary John Tsang Chun-wah said the insurance regulator has statutory powers to protect policyholders in the event AIG's local subsidiary, AIA Hong Kong, faces a crisis."
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Goh Eng Yeow blogging in The Straits Times of Singapore:
Full blog
"At 2 am, I was still getting SMSes from friends worried that their insurance policies with American International Assurance, AIG's life insurance unit, were safe, as the price of the beleaguered financial giant evaporated by as much as 75 per cent, before steadying slightly on news that New York State had thrown it a lifeline by allowing it to borrow up to US$20 billion assets from its units to use as a bridging loan.
... AIG's troubles will affect the thousands of insurance policyholders here, but the Monetary Authority of Singapore has given the assurance that AIA Singapore "currently meets all the regulatory requirements" to maintain sufficient financial resources to meet all its liabilities to policy holders."
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The Times of India writes:
Full report
"Even as Wall Street struggles to cope with the Lehman Brothers-Merrill Lynch double whammy, the aftershocks are reverberating across the Indian Institutes of Managements in India. For, they have been great hunting grounds for these banks.
Lehman Brothers has been recruiting from IIM-Ahmedabad since 1997 and in the past few years, been picking 12 people on an average every year.
In March 2008, Lehman Brothers recruited 10 students from IIM-A. Mihir Lal, co-ordinator, placement cell for class 2009 at IIM-A said, "It's too soon to say whether or how this will affect our placements. We'll know only in November when we have our lateral placements and then in February when we have our final placement."
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From BBC News' Washington correspondent Steve Schifferes:
Full report
"Although no taxpayer money was offered as two large Wall Street firms teetered on the brink of collapse, the events of this week have enmeshed the government more deeply than ever before in shoring up the financial markets.
The Treasury has doubled the national debt by taking over the $5.5 trillion obligations of the two giant government-sponsored mortgage lenders, with a $200bn down payment to recapitalise them. And the Federal Reserve has been forced to agree to take the "toxic" sub-prime loans as collateral from banks ...
The consequence is likely to that the next president may well spend much of his first year in office sorting out the financial mess."
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Sean O'Grady, writing in The Independent:
Full story
"The storm sweeping the financial world crossed the Atlantic yesterday, with Halifax Bank of Scotland, the UK's largest mortgage provider, hit hard by a cyclone of speculation. Having watched a series of major US institutions previously thought invincible, such as Bear Stearns, Fannie Mae and Freddie Mac, Merrill Lynch, Lehman Brothers and now AIG run into difficulties, traders asked "Who next?" and seized on the slightest hint of real or perceived weakness in the British banks to sell into a plummeting market."
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CNN Money senior writer Tami Luhby:
Full report
"American International Group spent the day on a stomach-churning roller coaster ride. ... It sunk another 46 per cent in after-hours trading amid reports the government is considering conservatorship as one option to save the company.
At the end of the day, AIG issued a statement directed at policyholders - not nervous investors - that its general and life insurance businesses, as well as its retirement services division, adequately capitalised and operating normally.
On its other problems? It 'continues to pursue alternatives'."
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The New York Times says:
Full report
"One clear implication of the tumult in the financial world is that some of the biggest brains in the business, from the Federal Reserve to Wall Street, have no idea what will happen next or how to respond.
So you are forgiven if you found yourself panicking as two Wall Street firms fell victim on Monday and the stock market took the biggest one-day fall in seven years. It's incredibly difficult to predict where the markets are headed in the coming weeks."
