As I mentioned in yesterday’s post “Corporate Welfare Wins”, Washington Mutual was struggling to survive. The battle has ended in WaMu’s demise and much of their assets are being transferred to JP Morgan in a US Gov’t brokered deal. This is the biggest bank failure in US history, but I doubt it will hold that title for too long. Wachovia is at great risk if the bail out is not passed. Money is continuing to flow from weak hands to stronger hands. Overall there will be less market participants with less liquidity from more stringent leverage requirements. This will likely cause wider swings from greater volatility given the reduced volume. The outlook continues to remain bleak for the global equity markets.
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