Lehman is Chapter 11, Merrill sold to BoA, now all the derivatives need to be unwound. This is huge and has never been witnessed before. According to AP: “On Sunday, there was also an emergency trading session being held at the International Swaps and Derivatives Association to “reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy.” The ISDA, which arranges trades for derivatives, said it was allowing customers to make trades and unwind positions linked to Lehman.”
<<<---There Are No Secrets, Only Information You Don't Yet Have--->>>
Derivatives are what it’s all about now.
The key issue in the market is discovering where the Lehman Toxic Waste is. With CDO’s it was bad enough. The CDO-squareds so effectively hid the name of the risk underlying the issuance to such an extent that people now don’t know where Lehman debt is – let alone how much they have.
But – and it’s a big but – Lehmans (Lemons) and the Bear will be small beer compared to the shit that will hit the fan if AIG go under. Currently they have a begging bowl out to the Fed with over $40bio of so-called “bridging loan”. They are considered a major counterparty risk at the moment.. If AIG go (and if the scribblers and shorts have their way they will for sure) then we are in a major Herstadt scenario all over again
Finally, Lemons aren’t dead yet. Their Broker-Dealer piece and the asset management company Neuberger Berman are still trading so the Lehman name will carry on for a while. In addition, the Bad Bank (the piece with the Toxic Waste in) will still need to trade. It’ll be interesting to see if anyone rights a line for them.
Goldies are laughing all the way to bank (heheheh) having got out of the Toxic Waste just before it went PeteTong. However, they are feeling pain as the market has effectively died and they are losing money as a result of having no-one to play with. Watch out for redundancies at Goldman Sachs in the near future.
Who’s next? AIG would be my bet but other than that I’d be looking this side of the pond. Lloyds?
Not wanting to be alarmist but…. Lehman is nothing compared to what could happen with AIG (the world’s largest insurer and a massive counterparty in credit derivative transactions). AIG needs new money invested or a US government bailout. See Alphaville’s summary of the situation.
http://ftalphaville.ft.com/blog/2008/09/15/15883/on-aig-cash-calling-the-fed/
Importantly “Trouble for AIG could pull the insurance sector into a deep and very nasty spiral and might well be the knock-out blow to ailing economies.” Says it all – time to buy some gold bars… and maybe some oil.
Unfortunately the current market context is not a good sign either. AIG lost 50% of its value last week & rating agencies have put them on “watch†and may downgrade AIG’s credit rating (unless they can get more money invested…)
Bump..
http://ftalphaville.ft.com/blog/2008/09/15/15887/lehman-in-default/
By the way Lehmans had $738bn in derivatives contracts in its last reported accounts…
Note that: a rating of “D” means
– default…
– You ain’t getting back the money you invested*
– You’re at the back of the line
– The derivative/insurance contract you’re paying a chunk of money for isn’t work Jack
* not strictly speaking true / the’re estimating unsecured lenders will get 30c-80c back in the dollar once the “debt collectors” come in and sell the family china.
Where does this leave the top ten private banks?
Citigroup
Goldman Sachs
UBS
Credit Suisse
JPMorgan
Morgan Stanley
Merrill Lynch
HSBC
Pictet & Cie
Deutsche Bank
@SparkyOne – Many of the names you’ve listed have reported multi-billion dollar losses as a result of the ToxicWaste Shock. However, a private bank (such as Pictet) probably isn’t exposed directly to the TW to the extent the others have been. However that’s not to say they won’t struggle for credit lines as the market shifts and flexes.
Anyone still holding bank stock?
One. More. Thing.
http://bigpicture.typepad.com/comments/2008/09/the-terrible-le.html
Barry gets it.
id disagree with a couple of the statements but i do think hes still a soft tyranny and will be until the end of the show…
On Dec 9th,2008. the complaint was sent to 150 Members of the House Of Lords and 230 Members of Parliament.
*** We thank —David Cameron. M.P. ( Canary Wharf Speech.) Dec. 2008.
(1) Bankers who behave irresponsibly should face professional consequences.
(2) If anyone is found to have behaved criminally they must be prosecuted.
(3) The F.S.A. and the Serious Fraud Office should be following up every lead,
investigating every suspect transaction .
(4) We need to make it 100% clear –those who break the law should face
prosecution.
(5) That we make sure we root out any wrongdoing that may have happened, whoever is
involved ,however high or well connected they may be.
Quote. ( America’s Top Lawyer .)
You can be the richest man in the world with the best lawyers that money can buy but you cannot win against a man who has got nothing left to lose and is telling the truth.
In June.2009 .it will be exactly a year since we started our campaign via the “net” to highlight our fight to get “justice”. In our second year campaign we will reveal further damning evidence . We again thank other “ E- Mailers” for their information in relation to our campaign.
Full Story.
Go to search box on “Google” and insert ( Ivan Pictet / Monty Raphael) or
insert ( Pictet & Cie / Monty Raphael.) – - then try it on “Yahoo”.
Or try (Jack Loach/ Ivan Pictet.)
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