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Friday, September 12, 2008

Tell me on a Sunday

The recent pattern of emergency moves by the federal government to prevent one of our teetering financial institutions from keeling over and crashing markets all over the world has tended to involve big announcements on Sunday. This, as I understand it, is designed to get things settled before Asian markets open for the week.

So, will the Lehman Brothers deal be announced this Sunday, or next Sunday? I'm betting next Sunday.

Comments (11)

I bet this Sunday. If they can't something done over the weekend, I'm not sure Lehman survives to next week.

Closer to home, does WaMu go into receivership today or next Friday?

Lehman deal announced tomorrow.

WaMu survives without FDIC intervention, unless CA house prices drop another 10%.

This Sunday, the Lehman ship is sinking to fast for it to make it another week.

Ah, concern for our international "financial" reputation.

Sarcasm aside, as much as I want to believe that the Sunday announcements are politically motivated to keep the news out of the media spot light, I truly believe it is out of fear of upsetting the Japanese and Chinese governments who own 25% of our government. Yes, technically its 25% of publicly held government debt, but lets not mince words ... its the same way shareholders own corporations.

Definitely this Sunday. Hank Paulson is working overtime to get it done.

We can read all about it in Vanity Fair or Esquire in a couple of months.

Actually it looks like this deal will be announced Mon...by BK lawyers.

I feel sorry for *anyone* who is long in their 401Ks.

"WaMu survives without FDIC intervention"

I am going to make so mmuch money when they go to zero.

"unless CA house prices drop another 10%"


You'll find out what a short squeeze is next week. WM is not going below $2.05/share.

In Vanity Fair, as a retrospective?

How about a now-nine-year-old retrospective on the formula? Derivatives.

Drexel Burnham Lambert

Where did all those former Drexel employees go anyway . . . like stage 3 cancer, if you ask me, that will consume the host.

Try to wrap your head around something like an inflation-indexed bond and conclude that it is anything other than analogous to the proverbial perpetual motion machine. (Risk transference is not "capitalism" per se, but a zero-sum sub-game that exists in parallel to something else that is tangible. A hedge, for example, between two speculative positions is just naked speculation times two, with Orwellian lip stick.)

From a Chinese perspective: If US home prices remain high then the labor cost to US employers will remain high and this will give a competitive advantage to Chinese exports vis-a-vis US exports. And trade between the two.

Does anyone know what sort of titles the Chinese give to Nobles?

"No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility." (Article I, Section 10, US Constitution)

Can congress take the private debts of a private corporation and convert them, retroactively, to something akin to a treaty obligation to guarantee profitability, while not calling it at face value a treaty? (The fannie mae and freddie mac bailout bill, in part, to the tune of 1.5 trillion in guarantees to foreign sovereign powers is pegged to preserving high home prices . . . and it strategically maintains a competitive disadvantage for us against foreign powers.)

"Nothing need be said to illustrate the importance of the prohibition of titles of nobility. This may truly be denominated the corner-stone of republican government; for so long as they are excluded, there can never be serious danger that the government will be any other than that of the people." (The Federalist Papers : No. 84, Hamilton.)

"Nothing need be said" . . . maybe back then.

I see a dividing line at what is or is not treason.

For the US Government to assume as it's own the private contractual obligations that Lehman Brothers has toward other private domestic parties, which Lehman cannot meet in a bankruptcy proceeding, would rise only to the level of ordinary corruption. Rather than as with the recent US Government retroactive pledge to cover for the private contractual obligations of the private bankrupt FNM and FRE, to the extent that it was owed to foreign powers, to the functional equivalent of treason.

By the way, FNM and FRE were known to have been on a certain path toward bankruptcy no later than late 2005. I would have no qualms about seeking to couple the retroactive US Government cover with an exemption for all securities purchases made by FHM and FRE from January 1, 2006, forward. There was a spurt of sales of toxic securities to FNM and FRE while the Bank of America and JP Morgan Chase drafted the bailout bill.

Should I have to remind folks that trade is a substitute for war, in the competition for resources. The capitulation by congress to foreign powers is truly tragic. By comparison, assuming all the debts of Lehman Brothers, to the extent that they are owed to domestic entities and people, would be less tragic, while being no less corrupt.

For contrast, should a US company that is owned, in part, by a foreign power be prohibited from filing bankruptcy? Could I view it as an "implicit guarantee?"


"Fannie Mae, established as a government agency, was converted into a public company in 1968 "

should read

"Fannie Mae, established as a government agency, was converted into a public[ly traded private] company in 1968"

WaPo: Fannie, Freddie to Be Kept Off Federal Budget

I'm in the money at 4. Long squeezes coming up -- esp in small caps.

Looks like none of us is right.

Lehman's filing bankruptcy.

Click on my name for the link.

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