Under your radar

Most of the major news stories have been covered to death: the Dow tanked 449 more points Wednesday, following Monday’s 500-point sell-off. Investors are still reeling from Lehman Brothers’ bankruptcy following talks with the British bank Barclays and Bank of America failed, and then Bank of America’s quick turnaround and snatching up of Merrill Lynch.

Then the government had to swoop in and save AIG - America’s largest insurer with over $1.1 trillion in assets and 74 million client in 130 countries - by lending it $85 billion to stave off bankruptcy. That’s on the heels of the Fed’s unprecedented takeover of mortgage giants Fannie Mae and Freddie Mac. Hold on, I need to catch my breath…

The economic turmoil has left people scared, and they’re fleeing financial giants they see as teetering on the brink of disaster. Morgan Stanley and Goldman Sachs - the only 2 independent investment banks left on Wall Street - have been getting hammered in the sell-offs, despite both reporting better-than-expected quarterly earnings. Now there are rumors swirling around that Morgan Stanley and Wachovia are courting, and Washington Mutual is putting itself up for sale.

So, in an effort to shore up confidence, central banks around the world - including the U.S. Fed, the European Central Bank, the Banks of Canada and Japan - have all agreed to pump an additional $180 billion into the world economy. Hold on, I need to get a glass of water…

With so many giant stories dominating the headlines, it’s easy to overlook some of the smaller tidbits that can nevertheless be hugely important. Let’s take a look at some of the stories that might have flown under the already-jammed radar:

1. The Fed decided to hold interest rates steady. There was a lot of buzz that the Fed would cut a key interest rate Tuesday in response to the agitation on Wall Street, but the Fed decided to hold the federal funds rate at two-percent. Despite an initial dip, the market reacted positively to the decision, which many saw as the Fed indicating economic conditions had not worsened.

2. Commodities prices are soaring. The upheaval on Wall Street has sent stock investors running for the hills - looking for gold and oil. Commodities are considered safer places to park cash while stock markets settle themselves down. As a result, oil prices jumped by $6 Wednesday - the second largest one-day surge ever; while, gold soared over $70 an ounce on that same day, the biggest one-day gain on record. Both oil and gold futures continue to rally.

3. The assets in a low-risk money market fund started dipping below “safe” levels. Money market funds have long been considered one of the safest investments around. Basically, the funds are required to invest in low-risk securities only and don’t tend to carry government insurance against losses. Generally investors don’t need to worry about huge losses, just about collecting interest, albeit slowly.

On Tuesday, though, the assets of the Reserve Primary Fund dipped just below a safety level that insures investors they can get all their money back due to bad investments in the now-bankrupt Lehman Brothers. It’s the first time any fund in the money market industry lost money for its investors since 1994.

Now that the beginning of the week’s initial panic may be passing, as the dust settles on Wall Street, the hope is that stock markets will acclimate to the new situation. The Fed and Treasury Department are taking unprecedented moves to protect America’s financial stability, but we still may have a few storms to weather.

Looking back to the immediate aftermath of the 9/11 attacks on America, stocks plummeted then even more than they did this week. Still, it only took 53 days for the markets to recover back in late 2001. Our financial system may be taking a beating right now, but I would argue that 9/11 was potentially a bigger blow than today’s financial woes. Despite this week’s scary headlines, I’m confident our financial system can recover quickly.

Let’s hope for the best.