Monday, bloody monday......

Financial Depends Pads, for those moments when you need good protection with slightly more absorbency!

Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government.

I knew it! The 'backstop' is going to be financed by...?

Lizbaby dude:

CME Group - Home

ooops! Wrong one. LOL!

Liz here:

Stock Futures on Bloomberg 

If AIG is downgraded tuesday,,they will have a cash call of around 46 billion,,man, now thats a lot of money.

Liz,
If you have cable, go to Bloomberg and they roll the tape.

Also the Bloomies public site will give you info on stocks and commodities.

Wall Street readied for a potential Lehman Brothers Holdings Inc. bankruptcy after Bank of America Corp. and Barclays Plc pulled out of talks to buy it and the government indicated it wouldn't provide funds to prevent a collapse.
Wall Street Prepares for Potential Lehman Bankruptcy (Update3) - Bloomberg.com

Paulson, Bernanke Brave `Raptors,' Resist Lehman Aid (Update1

Paulson, Bernanke Brave `Raptors,' Resist Lehman Aid (Update1) - Bloomberg.com
Henry Paulson and Ben S. Bernanke may have to weather more speculative attacks on financial institutions as they resist using public funds to aid the sale of Lehman Brothers Holdings Inc.

The raptors test the fence for weak spots,'' said Vincent Reinhart, a former director of the Federal Reserve Board's Division of Monetary Affairs who is now a resident scholar at the American Enterprise Institute in Washington.The speculators think the authorities will blink, and the authorities think the speculators will run out of funds.'

Re: The raptors test the fence for weak spots,'

Which is what Palin is all about...

639 online on a Sunday afternoon.

Tightening access to international credit and mounting stock losses are hurting Russian billionaires as well as state- owned corporations, prompting calls by businessmen to heed Western complaints over Kremlin policy in Georgia.

The country's biggest business association, the Russian Union of Industrialists and Entrepreneurs, will raise the issue today at a meeting with President Dmitry Medvedev, said Igor Yurgens, a board member and adviser to Medvedev.

This is a natural alarm clock,'' Yurgens said in an interview.It's a concern to big owners, it's a concern to the Russian economy. There are limits to what Russia can do alone if it chooses to be isolated.''

Global recession!

Did they mean raptor, meat-eating dino or raptor, F-22 Lockheed killing machine?

"It's a bailout again....Taking worthless paper into the fed reserve book is a bailout..."

Vladimir Bernanke and Hank Putin are betting that the American public can't figure that out. Unfortunately, there are only about 700 CR readers that know different.

Credit-default swaps on AIG, the biggest U.S. insurer, soared on concern that it may be the next big financial firm to run short of capital after $587 billion in contracts guaranteeing home loans, corporate bonds and other investments plunged in value. Standard & Poor's and Moody's Investors Service have said AIG's credit ratings may be cut if its mortgage assets fall further or if potential capital needs aren't addressed. AIG may have to post more than $13 billion of collateral following a downgrade, it has said in regulatory filings.

Turnaround Plan

Credit-default swap sellers demanded 12.5 percentage points upfront and 5 percentage points a year to protect AIG bonds from default for five years, according to broker Phoenix Partners Group. That means it would cost $1.25 million initially and $500,000 a year to protect $10 million in AIG bonds for five years. Yesterday, it cost $688,000 a year with no upfront payment, according to CMA Datavision.

AIG's market value shrank by 46 percent this week on concern its credit ratings will be cut. Chief Executive Officer Robert Willumstad has promised to deliver a turnaround plan on Sept. 25 after the firm posted three straight quarterly losses totaling $18.5 billion. The plan may be announced sooner, a person familiar with the company said.

``As distressed as they are, raising new capital could be extremely hard,'' said Tim Backshall, chief strategist at Credit Derivatives Research LLC in Walnut Creek, California, today in an e-mail.

You're looking at the guy who lost $600+ shorting LEH this month.

Don't feel too bad. I lost more shorting FNM. Should've had the conviction to keep the position on.

This is the problem for a few days ago:

Investors are showing less fear after the Fed set up special lending facilities following the Bear Stearns bailout, giving securities firms the same access to its cash as commercial banks. The ability to tap the Fed for funds means financial troubles at one investment bank are unlikely to bring down others.

We've learned that no dealer's going to fail,'' said Julian Mann, a bond manager at First Pacific Advisors LLC in Los Angeles, which oversees $11 billion.The equity may be worthless, but the trades are honored.''

OK, now what????

Old news, but related: JPMorgan Chase & Co. will stop selling interest-rate swaps to government borrowers in the $2.6 trillion U.S. municipal bond market roiled by an antitrust probe and the near bankruptcy of Alabama's most-populous county.

At least seven former JPMorgan bankers are under scrutiny in a Justice Department criminal investigation of whether banks conspired to overcharge local governments on swaps and other derivatives. The bank also is embroiled in negotiations over how to resolve a debt crisis with Jefferson County, Alabama, where the county's former adviser says a group of firms led by JPMorgan, the third-largest U.S. bank by assets, overcharged it by as much as $100 million for financing a new sewer system.

Don't feel too bad. I lost more shorting FNM. Should've had the conviction to keep the position on.

Hey, I lost money shorting oil, Indymac, and Lehman.

Sept. 11 (Bloomberg) -- Moody's Investors Service is about to tell as many as 29,000 U.S. state and local government borrowers that they have higher credit ratings. That doesn't mean taxpayers will enjoy lower borrowing costs anytime soon.

Next month Moody's will start changing how it assesses tax- exempt bonds, a move that will boost ratings by an average of one to two grades for cities and towns. Even with the expected increases, a tax-exempt borrower currently rated A is being charged an extra $6 million in annual interest to sell $1 billion of bonds, up from about $2 million a year ago, according to Lehman Brothers Holdings Inc. data compiled by Bloomberg.
Moody's Loses Credibility; Muni Ranks Mean No Savings (Update1) - Bloomberg.com

Call it what you want, it's still a bailout when you "accept lower-quality assets in return for loans from the government." You might as well take Hummel figurines and Franklin Mint miniatures as collateral.

if not resolved in some way,,prior to markets opening,,its not going to matter anymore...

America’s inflated asset prices will continue to fall !!!

CR, where the hell are you and how is that story going for Tanta?

chop yu dong - you have no clue how the federal government operates ina floating exchange fiat currency regime.

Punditry, cotton has been an international trade since the 1700s. A great launching platform for global finance.

Asian markets closed,,,,,what a break for the banks,,few more hours to stir the pot...

australian swap rates down 20 bp at the oen. this is not good for anyone anywhere. a small treasury contingent liability could have saved lehman and what will be a worsening of the credit contraction that will hit the global economy. very very shortsighted of paulson and the treasury.

You forgot the rebels in Nigeria are on a terror.

on MER.

"Merrill was believed to be asking for a price that would value the firm at well above $40 billion."

Are you kidding me?

Bank of America to Buy Merrill - WSJ.com 

LEH and BS are only needed on wall street, for the fees and bonuses.

Alexander Tyler

Hoax.

utter horseshit

last i checked Nemo, these were being taken at a discount, and the lower quality ones at a much steeper discount. furthermore, those get paid off at par in a BK in the first round. so how is this dumpage?

Well for all those traders that bought LEH at what they thought was the bottom friday,,,,,OH-MY...

I have some connections at Lehman. I was told I was "a lock" for an internship there next summer. They currently aren't answering the phone. Will this affect their intern program?

UPDATE:

I didn't make peanut butter cookies last night, I went for Brownies

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadde

@Dr. Roubini will be on Bloomberg in 10 minutes. talking about LEN

Let's hope he's been drinking. I want a rant like the one from the other day.

Roubini on Bloomberg Asia in a moment! Live.

Guess those 5$ puts on LEH are not looking to good right now..

ella, this doesn't involve the taxpayer. i have no idea what anyone is smoking, but the knowledge level here seems to have hit a new low.

and a BK here is probably the only option to stop disorder. the bad news is the equity holders are wiped out utterly, and the bond holders are also going to take it in the shorts. actually, i think this is a good thing. here is what happens when you forget about what the word "risk" means.

and the only thing the taxpayer should be worried about is the influx of all those people working for the financial sector into the Social Security roles because a lot of people's retirement just went up in smoke. And there is a lot more coming too. Wait until these trades unwind and make the weak even weaker. Watch MER next.

Another shotgun wedding arranged by Hank and Ben...BofA and ML.

Congrats to the newlyweds!

Who's going to pay for the dowery?

Nouriel's bring the 'bini on BloombergTV momentarily....

The Gods of the Copybook Headings

AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.

We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.

When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."

On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;

And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings with terror and slaughter return.

Once again dear friends, into the breech!!!

crispy&cole - Fear not. Spinco shall rise again.

I guess, Nemo, that I just object to the "blah blah blah taxpayer blah blah blah" lines without any knowledge. And i have no problem with accepting anything as collateral at the window, even some of the executives hand-made italian suits, so long as they are properly discounted. that's the way it should be.

and that's not even the most interesting thing about all of this anyhow. the interesting bits are, what is the franchise worth, what happens to the counter-parties, what about the bond holders, and the most philosophical question...is the business model dead? And if it is, that means it's dead around the world.

c&c,

Even if we get 1000 then that still leaves approximately 299,999,000 clueless. Sigh.

HB: That broke on CR about 2 hours ago.

I take it treasuries and the USD are doing poorly this evening? This is very unusual - surely they'll turn it around tomorrow. They always do.

This is the first time since 1987 I can recall gold up, dollar down, in response to financial chaos. Anyone have any other counterexamples?

Roubini on!

"the influx of all those people working for the financial sector into the Social Security roles"

The Rock had a line about that one...

LOL

Perhaps I should have just skipped grad school...

THAT explains a lot.

Ken Lewis is a genius.

Ken Lewis is a genius. I say again.

Vomit.

How much is Lewis going to pay above friday's close? Is it really going to be $29?

I wonder if he'll bid $500 for my old Atari 2600 along with Pac Man, Zaxxon&Donkey Kong cartridges.

PPT is on the job; S&P futures were down 40, now down only 37.

Tomorrow, they blow their wad. Wonder if it will be enough.

bill miller thanking his lucky stars he only added 10 million shares of LEH on Friday

MS and GS next to m&a

"No way they can survive"

-- Nouriel Roubini

"It’s all about Merrill. They need to announce a deal with BAC before the open. If they do not, they plunge to $10 to $12 (from $17) on tomorrow’s open and no way does BAC pay $25 to $30. Then Merrill is at risk of blowing up and a crash becomes very possible."

So why not just let it fall then pick it up for $15 per share?

"No way they can survive"

Wow!

I'll be surprised if the MER deal goes through at that price ultimately...or if it goes through at all.

And remember I keep telling you, while you're so busy freaking out over this, you should be paying attention to AIG, which is far more interesting and has much more damage potential.

Ah, your taxpayer dollars at work: S&P 500 futures only down 32, now.

Folks are calming down, now. All will be okay.

May you die a horrible death, PPT.

Hmmm...i will see what I can find out about MER/BOA counter-party crap and other entanglements. perhaps BOA is just covering its ass here, much the same Jamie did on the BSC deal by taking it all in-house. Perhaps it's the only thing to do. But they are going to be severely hurting from this and the CW deal...

at this point,,i dont think the gov. will allow AIG to be downgraded knowing full well that a 46 billion cash call would make everything that happened today look like playtime...

Wall street is one whole Level 3 unobservable casino with zero credibility and zero cash!

Andy in nz

Laughed so hard I lit the filter end of a cigarette. Haven't done that in years!

Chris,

That was a good one, subtle, but funny! Welcome!

If those futures stick, Monday will be a trend day - down 5% at least from Friday's close to Monday's low. SPX 1190 minimal target. If those futures hold

Oh for pity sake, Matt is CR, and I'm Tanta now, WTF?

So we head down 400 points in the morning? SO what? The market has been overvalued for years and the earnings yield are bullshit. Reality is good and America should not depend on synthetic bullshit to pump growth bubbles. The Dow should reset at 7500, so relax and be patient, that is unless it's God's Plan to stuff that reatrd Palin into office and screw this up even more! Don't get me wrong, I think Obama is very limited and will not solve much of anything, but at least change will be attempted (I hope).

A 30 billion sweetener given to JPM to gobble up BS was not considered tax-payer financed bailout by someone here. How can tax-payers' funds being used to mop up "lower quality" assets, assets that no one wants, be considered a bail out? No way.

What are the odds of the Fed doing an emergency 8:30AM rate cut tomorrow?

all right,,time to get some rest, gonna need it for mondays action,
plus i better do a little bonding with the missus.
ADIOS

What are the odds of the Fed doing an emergency 8:30AM rate cut tomorrow?

less than zero. this was the line in the sand, and ammo needs to be saved for a couple of big banks that will go down too.

and i agree this is historic. you are watching the end of the shadow banking system as it was known, and the end of modern finance as it became in the last quarter century. but something will come out of it.

The will Fed meet on Tuesday. They can cut then.

Calling Jas Jain...

i need to hear the soothing born and bred line...

They can't believe the government is not able to save them.

An attitude by no means limited to grandchildren.
My own epiphany on this point came back during the S&L meltdown. Some reporter was doing on-the-street interviews about the mess, asking passersby what should be done about it. One person's response: "why should the taxpayers bail out the S&Ls--why can't the government do it?"

Bingo.

well, all the boys got put in one room but they all decided that to pony money up was less attractive then to let the chips fall. which means that the people with the cash want to pick over good assets and let firms go BK. that's what should happen.

LEH made bad investment decisions. it now bears the responsibility and the government has stepped aside and told wall street to deal with its own. trust me, there will be A LOT of money made from these failures. none of this stuff is worth zero.

I suppose the worry is whoever is on the other side of their credit default swaps.

Ziggurat, indeed that is the worry. and outside of the federal power stucture to facilitate a solution for. someone is going to lose a ton of money here...and watch the hedge funds. a lot of wealth will be evaporated by next week. a lot.

I still think WaMu may end up being the biggest story of all.
Nemo

I agree, because much as we've been watching all these convolutions for hours, Average Annie and Andy could care less. They will here that on the news and go "Oh, that's those people on Wall Street. But Grandma standing in line outside her bank or 6 of the 18 nurses on our floor that I work with calling in sick so they can get in line? Multiple that by the number of branches across the country? THAT will get Annie and Andy's attention.