Thursday, September 11, 2008

Lehman's Deathwatch on CNBC

For those who have not watched CNBC lately, in addition to the scrolling list of stock prices on the bottom of the screen, they also have a list of major indices such as Dow, S&P 500, NASDAQ, and currency exchange rates on top of the screen. When commodities prices took off, they added oil, gold, natural gas etc to that list in different colors. Now a sign of how bad things are going for the financial stocks, Lehman, AIG, and Wamu appear on the top of the screen also.

2 comments:

Yang said...

Do you think LEH hold enough counterparty risk position that they have to be bailed out?

Chuck said...

From what I've read, the consensus is that if any of the large financial firms would not get bailed out, Lehman is the most likely. They are one of smaller of the major firms. From the government's standpoint, they can't bail out all the firms because 1)they want to send a message 2) their hands are already full with the GSEs. With all the rumors going around for months, traders are already avoiding to trade with Lehman, so counterparty liabilities will be reduced. But it will still be substantial. I'm also reading somewhere that Goldman might buy them out... either way, I think Lehman paraphernalia will become a collector's item.