Lehmans

napoleon

Wall Street suffers as Lehman shares plunge

By Alistair Gray in New York
Published: September 11 2008 13:51 | Last updated: September 11 2008 15:07

Financial stocks led Wall Street to a lower open on Thursday amid the continuing fall-out from Lehman Brothers’ difficulties.
Shares in the embattled investment bank fell another 41.1 per cent to $4.27 after the market opened. Citigroup and Goldman Sachs cut their recommendations.
The cost of insuring $10m of Lehman debt rose sharply on Thursday to $745,000, an all time high. This was measured by the spread of its credit default swaps, which widened 165 basis points to 745bp, compared with Wednesday’s high of 610bp. This suggested that Lehman was considered more likely to default than before. Its CDS were trading at 475bp prior to the company’s announcement on Wednesday of its largest ever quarterly loss and plans to split itself up.
The benchmark S&P 500 opened 1.5 per cent lower at 1213.36, the Dow Jones Industrial Average 1.3 per cent lower at 11,118.62 and the Nasdaq Composite Index fell 1.6 per cent to stand at 2,193.39.
Other financials stocks were down sharply. Washington Mutual, the regional lender, fell 19 per cent to $1.88, AIG fell 11.2 per cent to $15.53 and Merrill Lynch was down 17% per cent at $19.30.

worldtraveller

"Citigroup and Goldman Sachs cut their recommendations"

It's kind of farcical, each of the imploding banks, with derivatives unravelling around their traders feet, trying to rate each other! :rotfl:

Generali

Well the research division is meant to be completely separated from the rest of the bank. I don't imagine the banking analysts had too much say in what proportion of a CDO issue should remain on a bank's books!

Generali

posh*spice wrote: »

ahhh:rotfl:that 'tis true also:rotfl:it is plummeting - just $4.4 now (before opening of NY...)

Yeah, Lehmans down 40%, Washington Mutual down 20%, AIG down 10%.

I wonder if we're getting close to what people cleverer than me call capitulation - where people just sell at any price because they can't see any other way out of the losses.

Generali

PS I believe that Lehmans is now down more than 90% on the year. Anyone remember the 95% club from the dot com burst?

posh*spice

Lost 76% since Monday...:eek:

pizzagirl

Lost 44% today alone :eek:

WTF?_2

Generali wrote: »

Yeah, Lehmans down 40%, Washington Mutual down 20%, AIG down 10%.

I wonder if we're getting close to what people cleverer than me call capitulation - where people just sell at any price because they can't see any other way out of the losses.

The losses have to be addressed. Coming up with ever more esoteric measures to keep them off the books, or depending on never-ending rollover loans from the Central Banks is just going to stretch the crisis out.

The banks and financial institutions created much more credit than could ever realistically be paid back. Either inflate the debt away (accepting the economic and social consequences of doing so) or let the bust take its course (accepting the economic and social consequences of doing so).

There's no magic bullet or easy way out of this ... time for the bankers and politicians to accept that and for the public to be told.

The situation is exactly the same for house prices - they went higher than was sustainable so they must return to sensible levels or we need to see inflation that brings average salaries up to a level where 150k for a FTB rabbit hutch really is 'reasonable'. But that inflation would carry huge penalties.

worldtraveller

Lehman Brothers is for sale as Wall Street and financial regulators rush to salvage a once-thriving brokerage firm that's threatened by a potential exodus of clients and trading partners.

Lehman has put itself up for sale and has been calling rival banks, brokerage firms and other potential acquirers, according to three people familiar with the situation.

Suitors include Bank of America, The Wall Street Journal reported, citing unidentified people familiar with the matter. Spokesmen at Lehman and Bank of America declined to comment.

The Treasury Department and the Federal Reserve are helping with the sale, the Washington Post reported, citing sources familiar with the matter. Nothing is finalized and there are several potential outcomes, but a deal is expected to be unveiled this weekend before Asian markets open Monday morning, the newspaper added.

Potential buyers remain wary about troubled assets on Lehman's balance sheet and are increasingly looking to the U.S. government to help backstop any future losses, the Journal said.

MarketWatch

The Government (taxpayer) bailout "culture" again rears it's head. An ugly head, or just a necessary head, in today's economic climate? :think:

WTF?_2

worldtraveller wrote: »

The Treasury Department and the Federal Reserve are helping with the sale, the Washington Post reported, citing sources familiar with the matter. Nothing is finalized and there are several potential outcomes, but a deal is expected to be unveiled this weekend before Asian markets open Monday morning, the newspaper added.

Potential buyers remain wary about troubled assets on Lehman's balance sheet and are increasingly looking to the U.S. government to help backstop any future losses, the Journal said.

MarketWatch

The Government (taxpayer) bailout "culture" again rears it's head. An ugly head, or just a necessary head, in today's economic climate? :think:

Sounds like a replay of Bear Stearns, only with Bank of America being the front for the Fed.

It makes no difference ... the reality is that it'll be public money that's used to bail out the debts.