… Hit the Gulf Coast and Wall Street. Also in this Week’s Roundup of Last Week’s Developments: EU Growth Forecasts, China’s Industrial Output, U.S. Wholesale Prices and More.

The death toll from Hurricane Ike has risen to 31, according to the Associated Press, and millions of people remain without power and water today as Ike barreled up from the Gulf Coast into the Midwest.

September is considered the peak of the Atlantic Ocean hurricane season, and in the first week of September there were, for the first time in the 2008 hurricane season, four tropical cyclones that forecasters were watching.

Crude oil prices fell below US$100 a barrel to a six-month low as refineries and rigs along the Gulf of Mexico coast were spared the worst. More than 20 percent of U.S. oil refining capacity was shut, limiting fuel deliveries and prompting the Department of Energy to release 309,000 barrels from its emergency stockpiles.

Yet, even after a string of devastating hurricanes, the weekend storm on Wall Street storm may have topped them all. . .

Lehman Brothers Sinks, Merrill Lynch Sold
Coming on the heels of the unprecedented federal bailout of Fannie Mae and Freddie Mac, developments over the past weekend have everyone wondering what’s next and what will be the collective and individual impacts on corporate finance:

• A Chapter 11 bankruptcy filing by Lehman Brothers Holdings;

• Merrill Lynch & Co.’s sale to Bank of America; and

• American International Group’s restructuring plan, which may include selling off part of its business to raise desperately needed cash and boost investors.

Lehman Brothers confirmed early this morning that it will file for bankruptcy protection under the U.S. Bankruptcy Code and consider the sale of some of its operations. The 158-year-old investment bank, which started as an Alabama cotton brokerage, “failed to find a buyer after the U.S. government refused to provide a financial backstop to potential buyers,” according to Dow Jones Newswires. In March, the government and JPMorgan Chase bailed out Bear Stearns, a rival U.S. investment bank that JPMorgan Chase acquired with the government’s backing.

Early today, Bank of America, the U.S.’s second-largest bank by asset size, and Merrill came to a deal that valued Merrill at US$29 a share. Merrill shares have lost four-fifths of their value from the peak they reached last year. The $50 billion purchase is largely seen as a way to keep the brokerage firm’s business alive after 94 years. The takeover would make Bank of America the top U.S. bank; the deal opens the banking giant to vast underwriting businesses, making it the largest brokerage firm, with $2.5 trillion in client assets. Bank of America said its buyout is expected to close in the first quarter of 2009.

Rounding off the historic weekend on Wall Street: reports that insurance giant AIG is seeking an additional $40 billion in emergency funds. The nation’s largest insurer, rocked by the subprime crisis, is pulling together a survival plan that includes selling off some of its most valuable assets, raising more capital and going to the Federal Reserve for help, according to the Wall Street Journal. Late last night, the New York Times reported that a source close to the firm said that AIG may have only 48 to 72 hours to survive if it does not raise cash and is downgraded by ratings agencies. “AIG viewed the request to the Fed not as a bailout but rather as a temporary measure that would give the insurer some breathing room until it was able to dispose of the assets,” the Journal reports.

EU Cuts Growth Forecasts
“Growth in the 15 countries that share the euro currency contracted in the second quarter, the first contraction since the early 1990s,” according to the WSJ. “A big part of the problem is the fallout from financial turmoil that began with U.S. mortgage-related securities.”

“The European Commission said Wednesday it expects a ‘sharper-than-expected’ slowdown in the European Union economy for 2008 amid persistent high inflation, falling real estate markets in some countries and the turmoil on financial markets,” the AP reports.

The Commission’s latest interim forecast now expects the 27-country EU economy to expand by 1.4 percent this year, and the 15-country eurozone by 1.3 percent, below the 2 percent and 1.7 percent it expected in its last forecasts, released in April.

“Any remaining hopes that Europe would avoid a sharp economic downturn were finally dashed [Wednesday] after the European Commission forecast recessions this year in Germany, the UK and Spain — with France and Italy faring little better,” the Financial Times reported last week. “The steep downward revisions in growth forecasts by the European Union’s executive arm showed it had accepted that tumbling business and consumer confidence was hitting economic activity — even though the European economy had been ‘generally sound’ prior to the credit crisis.”

However, the president of the European Central Bank on Wednesday “urged European governments … not to go down the road of greater spending or higher wages,” notes the New York Times. “The bank argues that growth will resume by the end of the year.”

China’s Industrial Output Slows
“China’s industrial output growth rate fell to its lowest level in 18 months in August, adding to signs its rapid economic expansion faces a sharp downturn,” the AP reports of data reported on Friday.

China’s industrial output slowed to 12.8 percent over the same period last year, according to the country’s National Bureau of Statistics. “That was 1.9 percentage points below July’s growth rate and 4.7 percentage points below last August,” AP notes.

A major reason for the slow growth in output of Chinese goods is that the global credit market turmoil, triggered by the housing crisis in the U.S., has “severely damaged business and consumer demand in China’s largest export markets — the U.S. and Europe,” one expert said.

U.S. Wholesale Prices Down
A sharp drop in energy costs pulled wholesale prices down 0.9 percent in August, the U.S. Department of Labor reported on Friday. The producer price index (PPI) “showed its first decline since the start of the year and the sharpest drop since October 2006,” Agence France-Presse reports. The core index, which excludes food and energy, rose 0.2 percent for the month. The PPI’s drop came after a sharp 1.2 percent surge in July and 1.8 percent in June. Energy led the downturn, with a 4.6 percent decline in August after rising 6 percent in June and 3.1 percent in July.

Over the past 12 months, wholesale prices are up a strong 9.6 percent, or 3.6 percent excluding food and energy.

Chrysler to Launch New Round of Buyouts, with Assistance
“Chrysler LLC will begin offering new buyout packages to its hourly workers in the Detroit area in a bid to cut an additional 4,000 workers from its payroll amid a painful downturn in the U.S. auto market,” the WSJ reports. So far, “about 17,600 workers” have taken buyout offers, but Chrysler would like “to lift the number leaving the company to 22,000 hourly employees by the start of 2009.”

Employees will learn about the offers this month, company officials said. About 13,800 of Chrysler’s 45,000 hourly workers worldwide are eligible for the offers, and most are in the Detroit metro area, Chrysler said in a statement.

Though similar to past packages offered by the company, this round of offers has a new education option offered in conjunction with the state of Michigan. “The education options include health benefits, cash and up to $10,000 for two years of certified training so workers can go back to school while still being able to support a family,”
AP reports the VP of employee relations as having said.

Unemployment Falls
First-time claims for state unemployment benefits fell in the latest week, according to the latest data from the Labor Department. In the week ending September 6, initial claims fell 6,000 to stand at 445,000, the Labor Dept. reported Thursday. The four-week average of initial claims rose to 440,000, up 250 from the previous week.

Meanwhile, the number of Americans receiving state jobless benefits rose 122,000 to 3.53 million in the week ended Aug. 30, reaching the highest level since October 2003. The four-week moving average of continuing claims rose 36,750 to hit 3.43 million — the highest level since November 2003.

With the past weekend’s major developments (See first item), the decline in initial unemployment will likely reverse dramatically in coming weeks.