Brutto

Alternative Buyers for Lehman (and Not Just the Usual Suspects)

Whenever I hear anything from "broker sources", I can usually safely assume the opposite - they gossip like fishwives, usually about matters they don't fully grasp: perfect for spreading misinformation.

BAC's Ken Lewis Mulls Another Deal as Lehman Reaches Brink

Which CEO of a leading American Bank said: "I've had all the fun I can stand in investment banking right now" when things started to implode last year?

First to answer correctly gets a LEH share. Second prize: two LEH shares.

Write to Kenneth Lewis, c/o Bank of America to claim your prizes.

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.

Lehman: Nobody Knows Anything

One thing is for sure: Fuld has had it. For the last six months he has thrown away every opportunity to recapitalise LEH in the hope something better would come along later. And LEH could have possibly kept limping along if it weren't for the rating agencies now threatening a downgrade: that will be the nail in the coffin.

The Fed's problem is to find another "credible" stooge to stand in for what JP Morgan did when taking over Bear Stearns and to front a rescue with a Fed backstop. Giving a Fed guarantee to a foreign buyer just wouldn't look so good...

Goldman Sachs would have loved to do this if it weren't for the fact that they worry about being dragged down: there are enough questions about their own exposure, particularly as they have been messing about with commodities trading for the past quarter.

Time will tell...In the meantime Fuld is lucky not to be lynched by Lehman staff, who own a third of the stock.

NYT Smears David Einhorn, Again

Well said, Whitney! If Einhorn is dead wrong, we should thank him for making LEH affordable and load up on the stock (or, better, on the convertible) for the long term. If he is right, we should feel sorry for LEH employees who have a much higher proportion of their assets tied up in the firm than your average fund manager.

Either way, we know we are at an inflection point in the economy when press and governments have to go on a witchhunt for speculators and dark powers (those bad,bad hedge funds) as a scapegoat for market forces: not very rational, and more of a psycho/sociological phenomenon a this stage of the cycle.