Brutto

Let Lehman Fail

Good article. As stated, the writing was on the wall for LEH since the demise of Bear Stearns. Fuld had plenty of time and opportunities to recapitalise LEH and passed to protect his position, always hoping that a better deal would come along later.

If LEH gets rescued now with a Fed backstop, it will be open season for buying the bonds and shorting the stock of the next victim (Merrill, say) in the expectation that the Fed will have to step in again and effectively guarantee the debt.

And again when the next domino falls,... and again...until they run out of credible buyers that can be strong-armed or bribed into fronting these bailouts.