Ha, Paul Krugman, in a post today says that Lehman Brothers is on the way to the Gutter – probably it’s going to happen on Monday. Will we call it “Black Monday“? I bet no way is found, even short term – and Krugman remarks:
They still haven’t
chosen a Popefound a way to rescue Lehman.
But to my way of thinking, a line is drawn in the sand, and Lehman is on the other side of it – meaning that more banks will fail soon, bring down the economy even further.
Why has the line been drawn here – why was Bear Sterns bailed out but Lehman isn’t going to be? Where do you draw the line in the first place?
The overarching goal of the weekend talks was to prevent a quick liquidation of Lehman, a bank that is so big and so interconnected with others that its abrupt failure would send shock waves through the financial world. Of deep concern is what impact a Lehman failure would have on other securities firms, insurance companies and banks, notably Merrill Lynch and the American International Group, both of which have come under mounting pressure in the markets.
I think, given the way things are going, one or two large financial institutions will be left to fail in order to spur the others to rescue themselves – but it’s far fetched to see how any of this is going to help, even in the shortrun.
Yes, Monday is going to be a interesting day on Wall Street, won’t it?