Asia Stocks Tumble to 3-Year Low on Bank Woes; Macquarie Slumps
The MSCI Asia Pacific Index fell 2 percent to 108.34 as of 9:19 a.m. in Tokyo, set for the lowest finish since October 28, 2005. Japan’s Nikkei 225 Stock Average plunged 2.6 percent to 11,441.81. Equity benchmarks throughout the region declined.
U.S. stocks slumped to the lowest in three years yesterday, with the Standard & Poor’s 500 Index sliding 4.7 percent.
More than $19 trillion has been wiped off global stock market value since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression and a resulting global credit crisis slowed the world economy. This week, Lehman Brothers Holdings Inc. filed for bankruptcy and the U.S. government had to take over AIG, wiping out shareholders of both.
Lehman’s Bankruptcy the Ultimate Wall Street Derivatives Defaults Nightmare
No matter what, there’s no denying that the Lehman debacle is a massive and immediate threat to U.S. and global markets. At the latest reckoning, Lehman had $691 billion in assets. That makes it bigger than Wachovia, twice as big as Washington Mutual, and over sixteen times larger than Schwab.
Lehman’s debts — at $668.6 billion — are also enormous. Even if you added together all the debts of TD Ameritrade, E-Trade and Schwab, you’d still have only $108.5 billion, or less than one-sixth the total debts which Lehman reports.
In fact, among brokers, there are only two other U.S. firms that beat Lehman in the debt category: Morgan Stanley, with $1 trillion, and Merrill Lynch, with $988 billion.
The reality: The collapse of America’s third-largest brokerage operation is very serious business with equally serious consequences.