Lehman Brothers

[eric_cartman]

We should know by midnight EST the fate of Lehman Brothers.

I still suspect the Fed will somehow bail them out, without actually calling it a "bailout"....

 

[rational thinker]

Is this as bad as Fannie Mae and Freddie Mac?

 

[forsmant]

I think Fannie and Freddie is worse. There were a lot of funds invested in those two and now it is worth nearly zero.

 

[RonPaulVolunteer]

No, this is a LOT worse.

 

[eric_cartman]

Is this as bad as Fannie Mae and Freddie Mac?

sort of a different scenario. This is exactly like what happened to Bear Sterns in March of this year. With Fannie and Freddie, these were already quazi-government institutions anyways, so it's more reasonable that they were bailed out. That being said, Fannie and Freddie are much larger than Lehman.

The danger with Lehman, is that if they went bankrupt and were forced to sell their assets on the free market... a lot of their toxic debt would be exposed for its true value. That means that everyone else who holds that same toxic debt (all the other financial institutions on wall st.) will be forced to write down the value of those same assets, which would probably bankrupt everyone.

If Lehman goes bankrupt tonight... if no one steps in to buy them, if the Fed and Treasury just let them liquidate their assets... i don't think wall st. would open on monday. it would be down lock limit and closed for the day. the dollar would drop sharply.... gold would skyrocket. I don't think this is an option... they will not just let it go bankrupt... there will be some kind of plan, and i suspect the fed will find a creative way to bail them out.

 

[RonPaulVolunteer]

sort of a different scenario. This is exactly like what happened to Bear Sterns in March of this year. With Fannie and Freddie, these were already quazi-government institutions anyways, so it's more reasonable that they were bailed out. That being said, Fannie and Freddie are much larger than Lehman.

The danger with Lehman, is that if they went bankrupt and were forced to sell their assets on the free market... a lot of their toxic debt would be exposed for its true value. That means that everyone else who holds that same toxic debt (all the other financial institutions on wall st.) will be forced to write down the value of those same assets, which would probably bankrupt everyone.

If Lehman goes bankrupt tonight... if no one steps in to buy them, if the Fed and Treasury just let them liquidate their assets... i don't think wall st. would open on monday. it would be down lock limit and closed for the day. the dollar would drop sharply.... gold would skyrocket. I don't think this is an option... they will not just let it go bankrupt... there will be some kind of plan, and i suspect the fed will find a creative way to bail them out.

Unfortunately, it's not going to happen. No bailouts. They are going to declare ch11 in a few hours.

 

[RonPaulVolunteer]

http://www.iht.com/articles/2008/09/15/business/15lehman.php?page=1

 

[eric_cartman]

Unfortunately, it's not going to happen. No bailouts. They are going to declare ch11 in a few hours.

there is still about 2 hours left.

Bank of America just bought Merrill Lynch for $44 Billion. There are deals in the works.... they're going to hatch something up. They wont just let Lehman go bankrupt. Someone will buy them, and the Fed will somehow fund it... maybe through increased lending at the new lending window.

http://www.bloomberg.com/apps/news?pid=20601087&sid=alGoI3fTq1Us&refer=home

 

[danberkeley]

visit RPF's Economics and Sound Money section. We're keeping track of this...

 

[madRazor]

Domino 3 has fallen, Lehman to file for bankruptcy before Monday morning. Stock futures down hard.

Also, Bank of America has stepped in to buy Merrill Lynch at a hefty premium. Give it a little while, then short the crap out of BofA. If you have deposits with them, might be time to find a local credit union or a mattress for your dough. Or perhaps some physical gold/silver..

 

[Pauls' Revere]

I heard Bank of America will purchase merrill Lynch!!!

 

[Micah Dardar]

I like to give honest consideration to all extremes of a situation. I hear talk from some people outside of the forums that this is going to slip us into socialism. I thought that socialism came with free shit, though. Where's my free shit?

Free? Oh, I guess that was just a nice story to get weaker people hooked.

 

[Goldwater64]

sort of a different scenario. This is exactly like what happened to Bear Sterns in March of this year. With Fannie and Freddie, these were already quazi-government institutions anyways, so it's more reasonable that they were bailed out. That being said, Fannie and Freddie are much larger than Lehman.

The danger with Lehman, is that if they went bankrupt and were forced to sell their assets on the free market... a lot of their toxic debt would be exposed for its true value. That means that everyone else who holds that same toxic debt (all the other financial institutions on wall st.) will be forced to write down the value of those same assets, which would probably bankrupt everyone.

If Lehman goes bankrupt tonight... if no one steps in to buy them, if the Fed and Treasury just let them liquidate their assets... i don't think wall st. would open on monday. it would be down lock limit and closed for the day. the dollar would drop sharply.... gold would skyrocket. I don't think this is an option... they will not just let it go bankrupt... there will be some kind of plan, and i suspect the fed will find a creative way to bail them out.

Damn fine summary of the situation Eric Cartman.

 

[Malakai]

If you think socialism = free stuff, then you need to read more. Start with "Road to Serfdom" from Hayek. I did =)

 

[Micah Dardar]

If you think socialism = free stuff, then you need to read more. Start with "Road to Serfdom" from Hayek. I did =)

I was joking. Socialists play a psychological game with people's instincts. They always make promises that they cannot keep.

 

[idiom]

LEH just filed. Their trading is suspended on the ASX.

 

[BeFranklin]

I heard Bank of America will purchase merrill Lynch!!!

Ouch. That means Lehman's position was so hopeless that Bank of America went for the next financial institution that was going to fall instead. That explains why Bank of America didn't buy Lehman.

 

[RonPaulVolunteer]

there is still about 2 hours left.

Bank of America just bought Merrill Lynch for $44 Billion. There are deals in the works.... they're going to hatch something up. They wont just let Lehman go bankrupt. Someone will buy them, and the Fed will somehow fund it... maybe through increased lending at the new lending window.

http://www.bloomberg.com/apps/news?pid=20601087&sid=alGoI3fTq1Us&refer=home

Told ya. They filed.

Look mommy, a shooting star.
Sigh. No Thommy, that's just our dollar.

 

[ultimaonliner]

My short on Lehman has been and will be great Monday morning

However, Bank of America with prodding from the government is buying Merill Lynch in a stock deal of 0.8595 shares of BAC for 1 share of MER.

My MER short just blew up

Merill for all intensive purposes was on its way to bankruptcy, just like Lehman.

 

[RonPaulVolunteer]

My short on Lehman has been and will be great Monday morning

However, Bank of America with prodding from the government is buying Merill Lynch in a stock deal of 0.8595 shares of BAC for 1 share of MER.

My MER short just blew up

Merill for all intensive purposes was on its way to bankruptcy, just like Lehman.

I don't think you get it. They just filed. Your short is now worthless. All trading has been stopped.