Merrill Lynch's stunning loss reflects new reality

The New York Times notes that in one quarter Merrill Lynch wiped out about four years of book value growth. New CEO John Thain would like the world to think the worst is over. But I'm not so sure. Hopefully, the $13 billion in newly raised capital will help. Which raises a bigger issue. Many people assumed that Thain would bring a Goldman Sachs mentality to the job. But that may not be possible now. The firm--along with others--will almost certainly reduce its risk profile. Using the balance sheet to power profits is not going to fly right now. Even Goldman Sachs may ratchet down. So the crisis is imposing new discipline on the industry. 

For more:
- here's a New York Times article