The Tough Times Are Far From Over...

After Monday, it's not if someone will be
wearing a barrel, but who will be wearing a barrel.

When the New York markets open on Monday morning, it is likely we will see events unfold we've never seen before in most of our lifetimes. I'll let the news services describe what is about to take place:

• From The New York Times: " In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer, people briefed on the deals said."

• From the BBC: "Preparations are being made for Lehman Brothers, the fourth-largest investment bank in the US, to file for bankruptcy. The two strongest potential buyers appear to have pulled out of talks to rescue Lehman - the latest victim of the American credit crisis. If no new financing comes before Wall Street opens, it will have to seek "Chapter 11" bankruptcy protection. This could result in a severe shock to the global financial system, as banks unwind their complex deals with Lehman."

• From The Wall Street Journal: "Insurer American International Group Inc., succumbing to relentless investor pressure that drove its shares down 31% on Friday alone, is pulling together a survival plan that includes selling off some of its most valuable assets, raising more capital and going to the Federal Reserve for help, people familiar with the situation said. The measures are aimed at staving off a downgrade by major credit-rating firms. AIG executives worried that such an action would set off a chain reaction that could be fatal to the firm. The insurer, which has already raised $20 billion in fresh capital so far this year, was seeking to raise an additional $40 billion to avoid a downgrade."

• From The Financial Times: "The U.S. dollar tumbled and Treasury debt and gold prices jumped on Monday after talks to sell Lehman Brothers faltered, leading to grave uncertainties about other banks and shaken confidence in the financial system."

Extra: Up till now, the focus of the two presidential campaigns has been on personalities. It will be interesting to see how quickly they can focus on economics.