A day after Lehman Brothers filed for bankruptcy and Merrill Lynch, another Wall Street titan once considered invincible, was sold, central banks in Europe and Japan provided a desperately needed 160 billion dollars in liquidity.
Total injections since the weekend are now approaching 300 billion dollars.
With insurance giant AIG scrambling to prevent its own collapse -- showing that the end of Lehmans is not the end of the crisis -- the money is needed to keep banks lending to each other and therefore to firms and individuals.
Sources close to AIG, the biggest insurer in the United States with operations worldwide, were quoted as saying it might go bankrupt if it could not raise massive new finance by Wednesday.
"The situation is dire," one anonymous source told The Wall Street Journal.
Share prices fell for a second day. In Europe shares fell by 1.44 in morning trading in London, 1.45 percent in Frankfurt and 0.71 percent in Paris. This was less heavily than on Monday, but banking shares were again hard hit.
The European Central Bank said it allotted 70 billion euros (100 billion dollars), more than double the 30-billion-euro injection it had provided on Monday.
It also said it had lent 150 billion euros to commercial banks in a regular weekly refinancing operation in which markedly higher lending rates paid testament to increased market tensions.
The Bank of Japan meanwhile carried out two injections, the first of 1.5 trillion yen (14 billion dollars, 10 billion euros) and the second of 1.0 trillion yen.
In Britain, the Bank of England injected 20 billion pounds (35.9 billion dollars), four times Monday's total.
Switzerland's central bank said it would supply liquidity "in a flexible manner and generously" to money markets. On Monday the Swiss National Bank injected twice as much liquidity as usual to the market.
All eyes were on the what the US Federal Reserve would do next after it had provided 70 billion dollars in extra liquidity on Monday.
There was widespread speculation that the US central bank might reverse its policy and cut interest rates to prevent the US financial system from toppling and dragging the economy down with it.
Economist Brian Bethune at Global Insight said: "The sudden bankruptcy of Lehman Brothers over the weekend has led to another dangerous escalation of the crisis in the US financial markets -- a crisis that has been seriously harming the performance of the economy for over a year now.
"The economy is very weak, the recession wolves are pounding down the door and the financial system faces new deflationary threats from the bankruptcy of Lehman Brothers. This is an emergency situation."
Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Tuesday the current international credit crisis was "unprecedented" but cautioned against panic.
- Charles Dickens
Stocks held by AIG in India
American International Group (AIG) too has been facing liquidity crisis and has been working on plans to raise capital after its three straight quarterly losses totally $18.5 billion. It has also asked Federal Reserve for a $40 billion bridge loan. Below, we enlist the holdings of AIG in India, which could face pressure in case of liquidation. Out of these, three of the stocks are under our coverage-Ipca Labs, Nucleas Software and Unity Infra.
Co_Name | Holder's Name | Percentage Stake | No of Shares |
| AIA Engg | AIG Global Investment Corporation | 1.16 | 218000 |
| AIA Engg | AIG Global Investment Corporation | 1.26 | 236526 |
| AIA Engg | AIG Global Investment Corporation | 1.3 | 245005 |
| Bharati Shipyard | AIG Trustee Company India Pvt Ltd | 1.19 | 314145 |
| Bharati Shipyard | Aig Trustee Company India Pvt Ltd | 1.14 | 314145 |
| Bharati Shipyard | AIG Trustee Company P Ltd - AIG India Equity Fund | 1.32 | 314145 |
| Federal Bank | AIG Global Investment Partners LP | 1 | 1708472 |
| Gayatri Projects | AIG Trustee Company India Pvt Ltd | 1.4 | 141109 |
| Gayatri Projects | AIG Trustee Company India Pvt Ltd | 2.07 | 209609 |
| Gokaldas Exports | Aig Trustee Company India Pvt Ltd | 1.05 | 361031 |
| Gokaldas Exports | Aig Trustee Company India Pvt Ltd | 1.12 | 385504 |
| Indo Tech | AIG Global Investment Corpn Asia | 2.12 | 225000 |
| Ipca Labs. | AIG Trustee Company India Pvt Ltd | 2 | 500000 |
| Ipca Labs. | AIG Trustee Company India Pvt Ltd | 1.4 | 350000 |
| Kolte Patil Deve | AIG Trustee Company India Pvt Ltd | 1.06 | 800000 |
| Mindtree Ltd | AIG Offshore Systems Service Inc | 3.27 | 1240167 |
| Mindtree Ltd | AIG Offshore Systems Service Inc | 3.28 | 1240167 |
| Mindtree Ltd | AIG Offshore Systems Service Inc | 3.33 | 1240167 |
| NIIT Tech. | AIG Global Investment Corp | 1.7 | 665510 |
| NIIT Tech. | AIG Global Investment Corp | 2.29 | 1346370 |
| NIIT Tech. | AIG Global Investment Corporation | 1.5 | 588380 |
| Nucleus Software | AIG Global Investment Corporation | 1.58 | 509864 |
| Sun Pharma Advan | AIG Global Investment Corporation Asia Ltd | 1.17 | 2335496 |
| Sun Pharma Advan | AIG Global Investment Corporation Asia Ltd | 1.81 | 3650141 |
| Sun Pharma Advan | AIG Global Investment Corporation Asia Ltd | 2.39 | 4956986 |
| Unity Infra | AIG Global Investment Corporation (ASIA) | 1.05 | 140000 |
Here is a template for you. Maybe you will be able to add a few metrics of your own here but the above one covers almost everything to tell you about the state of the market. If you keep a track of these metrics I'm sure, you will not need financial news tv, pink papers and magazines, yahoo messengers, chat rooms, forums, tipsters selling buy this sell that kinda crap. Be your own master, be independent.
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