Wall Street Crisis Will Hit Madison Directly, Indirectly
Higher Interest Rates Expected
Updated: 12:35 pm CDT September 16, 2008
MADISON, Wis. -- Monday was a busy day in what has been a very volatile year in finances.
VIDEO: Watch The ReportOil prices fell in the global markets on Monday. But, that was about the only good news on Wall Street.Investors reacted to the announcement of Lehman Brothers -- a major investment bank -- filing for bankruptcy by selling off stocks. If that wasn't enough on Wall Street, Bank of America announced it will buy out Merrill Lynch.Also on Monday, insurance company AIG announced it was in trouble and was seeking emergency funding to get out of debt.The news was big on Wall Street, but here in Dane County, Wisconsin business experts said it will be felt two-fold."First, if you directly hold Lehman stock, obviously it's not good news," said UW Madison School of Business professor Morris Davis. "Second, even you don't own Lehman stock, there's more risk and uncertainty in the marketplace than there used to be."Davis said it translates into higher interest rates for things like auto loans and home equity lines of credit.The news also shook up stocks, which will likely adversely affect your 401K's. But Davis said consumers should not consider re-allocating your 401K investments, solely because of Monday's announcements.Davis blamed the housing market and falling prices for everything we've seen the last year. But he's optimistic that this roller coaster ride is almost over."I think we're near bottom," Davis said. "We might have another six months to a year of falling prices, but the decline in prices shouldn't be as big as what we've already experienced."As for the buy-out of Merrill Lynch by Bank of America, experts said it's actually a good economic move and basically turns two big banks into one big bank.For consumers with investments, experts advise not to look at their 401K statements until the market starts to rebound.Stay tuned to WISC-TV and Channel 3000 for continuing coverage.
VIDEO: Watch The ReportOil prices fell in the global markets on Monday. But, that was about the only good news on Wall Street.Investors reacted to the announcement of Lehman Brothers -- a major investment bank -- filing for bankruptcy by selling off stocks. If that wasn't enough on Wall Street, Bank of America announced it will buy out Merrill Lynch.Also on Monday, insurance company AIG announced it was in trouble and was seeking emergency funding to get out of debt.The news was big on Wall Street, but here in Dane County, Wisconsin business experts said it will be felt two-fold."First, if you directly hold Lehman stock, obviously it's not good news," said UW Madison School of Business professor Morris Davis. "Second, even you don't own Lehman stock, there's more risk and uncertainty in the marketplace than there used to be."Davis said it translates into higher interest rates for things like auto loans and home equity lines of credit.The news also shook up stocks, which will likely adversely affect your 401K's. But Davis said consumers should not consider re-allocating your 401K investments, solely because of Monday's announcements.Davis blamed the housing market and falling prices for everything we've seen the last year. But he's optimistic that this roller coaster ride is almost over."I think we're near bottom," Davis said. "We might have another six months to a year of falling prices, but the decline in prices shouldn't be as big as what we've already experienced."As for the buy-out of Merrill Lynch by Bank of America, experts said it's actually a good economic move and basically turns two big banks into one big bank.For consumers with investments, experts advise not to look at their 401K statements until the market starts to rebound.Stay tuned to WISC-TV and Channel 3000 for continuing coverage.Copyright 2008 by Channel 3000. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
