Wall Street in Chaos: No More Lipstick Jokes

The elections are likely to get a different overtone as the presidential candidates calibrate their campaigns to suit the new American reality: two of the country’s most significant investment banks disappeared during last Sunday.

Lehman Brothers collapsed and Merrill Lynch was compelled to join forces with the Bank of America. “This is the worst I’ve ever seen–historical and shocking” remarked former Deputy Treasury Secretary Roger Altman on CNBC.

Earlier on ABC the former Chairman of the U.S. Federal Reserve Alan Greenspan said that what is at hand is a “once in a century” crisis that is still to be resolved –and may yet claim many more victims. Then the channel’s host said out-loud something that sounds almost too ridiculous to be true: at the start of this year there were five large investment banks in the US, now only Goldman Sachs and Morgan Stanley are left.

The insurance-giant AIG is wobbling uncomfortably on the ledge of a cliff, earlier this year Bear Stearns was acquired by JP Morgan with the support of the Federal Reserve, and a week ago the U.S. government had to step in to save Fannie Mae and Freddie Mac from the brink of bankruptcy.

Last week the election was all about what Barack Obama meant when he used the old “lipstick on a pig” saying – this week the issues discussed will probably be of a different magnitude.