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Crisis on Wall Street: Roubini Predicts Another 20 Percent Stock Drop, Sale of Goldman, Morgan

Posted Sep 15, 2008 09:35am EDT by Aaron Task in Investing, Recession, Banking
Related: LEH, MER, AIG, GS, MS, WM, XLF

After failing to find a buyer this weekend, Lehman Brothers filed for the largest bankruptcy in U.S. history while Merrill Lynch agreed to be acquired by Bank of America for $50 billion. Such extraordinary events set the stage for a wild Monday on Wall Street, and most likely beyond.

These incredible, once unthinkable developments have caught a lot of people off guard, but not Nouriel Roubini, of NYU's Stern School and RGE Monitor, whose alarming predictions about the housing market and finanical system have been coming to pass with alarming frequqency.

This morning, Roubini forecast another 20% drop in stock prices, and reiterated a prior view that there will be no major independent broker/dealers standing before this crisis ends. In other words, Goldman Sachs and Morgan Stanley should be seeking suitors today, or face a similar fate as Lehman later.

Roubini and NY Post Wall Street reporter Mark DeCambre joined Henry and me this morning to discuss this weekend's dramatic events. The accompanying video focuses on the big question of "What's Next?" Stay tuned for subsequent segments where we will drill down on related issues, including:

  • What is the economic impact of Wall Street's unwinding?
  • The response of policy makers: Good, Bad, Insufficient?
  • What happens when the Fed meets Tuesday?
  • Why Bank of America may regret buying Merrill Lynch.
  • What's the fate of AIG, Washington Mutual, Citigroup, Goldman, Morgan, and other financial firms?
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