The Market Hick

The Doom & Gloom of Lehman Brothers

Steve,

Once you again you offer very sound analysis. You have a bright future ahead of you if the US survives this financial debacle.

Lehman Brothers on Sale?

Yes Lehman is on sale. They have a financing plan! They've been pursuing that plan for months with no success. They're only hope is a take-under, not a take-over.

Distinguishing Between Out of Favor Sectors and Doomed Ones

The real cost of bailouts should be bourne first and foremost by the people running the companies being bailed out. Until a CEO and his handpicked board of directors go bankrupt along with the company, we will have no moral hazard. Instread the best paid job continues to be the CEO of a bankrupt company.
What we need is the embrace of a new compensation scheme whereby executive officers and boards of directors are directly responsible for a portion of the company's debts that is related to the amount of stock rewards and compensation they receive.
Of course you may say no one in his right mind would take such a deal, but everyday people take such risks- they're called small business owners!

Lehman Default Risk

Start posting charts for CDS's on MER and MS. I wouldn't be surprised if their are among the next to be taken out and shot!

God help us all.

Lehman: The Lying Lemon Lemming Anecdotal Timeline?

Reggie,

I am a member of your site but I find the layout a little odd and user unfriendly,not a dig at you just a user feedback comment.Now on to the real reason I write:I have noticed that in the July contract month for LEH, there are call and put contracts with strike prices as low as $2.50.There is also a large(in my opinion) open interest in some of these put contracts-17000 in the 10's and 46000 in the 20's. I find this a little curious that there are contracts so far out of the money and that there is so much activity in them.Even in the June expiration,there are contracts at 17.50 with open interest at almost 17000.
I recall reading a SA article a while back that there was a request to the options exchanges to open up far out of the money put contracts on BSC shortly before the bottom fell out on them.Something similar seems to be happening here.I don't know when trading in these contracts on LEH(also similarly priced contracts on MS) started,but doesn't a special request to the exchanges have to made to open up contracts so far out of the money? Any way you or I can figure out when those requests were made?
The mere fact that these contracts are out there and the level of trading that is occurring tells my LEH and/or MS geese are about to get cooked,or am I reading too much into this? Given my risk tolerance I am considering taking positions in far out of the money July's,could be a great way to make a killing if what you have been writing about the 2 companies truly starts to manifest in street perception. BTW today we have a fed governor criticizing bailout of BSC and saying next time we will have to let a big I-bank fail.So if LEH or MS do get into real trouble,we could see 0 on their stock price.I like shorts that go to 0!