Things Are Looking Bad, Really Bad

A financial powerhouse that was founded in 1850 became the latest firm to fall in the midst of the subprime mortgage crisis. Lehman Brothers, filing for Chapter 11 bankruptcy protection earlier today, demonstrates once again that "the bigger they are, the harder they fall." Along with Lehman, in related banking and financial news today, Merrill Lynch was sold to Bank of America for $50 billion in BOA stock, while AIG is reportedly asking the Fed for $40 billion in emergency funding a la Bear Stearns earlier this year.

In a sea of red ink within the financial industry right now, will the Fed cut rates tomorrow?

Given these financial problems, the only good news may be that crude oil hit a seven-month low of $94.13 on word of all of this other bad news; however, Hurricane Ike is making sure the lower crude oil prices aren't necessarily translated to lower 'at the pump' prices. As I drove though Linton this morning, $4-plus gasoline seemed to be the norm.

As Americans' standard of living continues to erode, something has to break at some point. After all, to borrow Ronald Reagan's now-famous line from his 1980 debate with Jimmy Carter, "Are you better off than you were four years ago?" Of course, an old adage, which was popularized by former President Reagan, too, says "A recession is when your neighbor loses his job. A depression is when you lose yours."