One by one the dominoes have fallen on Wall Street: Bear Sterns, Fannie Mae and Freddie Mac, and now Lehman Brothers over the weekend. Merrill Lynch has apparently staved off the hangman, but not a fire sale, by agreeing to be taken over by Bank of America. Now the market's attention is fixed on AIG, the nation's largest insurer, which is caught in a cash flow squeeze as it tries to stay afloat. With officials at the Treasury indicating they're done with bailouts, investors continue to sell everything for fear it may be the next rock to be turned over.
The rush to safety even lent strength to the U.S. dollar, as buyers looked for places to park cash. Mattresses looked like a good investment today. Interest rates on one-month Treasuries fell to just .36 of 1%, their lowest level since the collapse of Bear Stearns in March, as investors sought out life preservers en masse. Yields on 30-year bonds fell below 4% for the first time since the early 1960s.
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