Which of these are too big to fail?
5) First Fed
6) General Motors
Get some popcorn HP'ers, and enjoy the show... (note - I now hold LEH puts, should have had 'em all...)
Too big to fail? We'll see about that
The calamity in the financial sector will be remembered for the household names it damaged or took down.
The mess in the U.S. financial system is making me nostalgic for the dot-com collapse of 2000-2002. That, too, was a cataclysmic bursting of an insane market bubble.
We've already lived through several such systemic shocks this year. Countrywide Financial Corp., brokerage Bear Stearns Cos. and IndyMac Bancorp are history, the first two rescued just in the nick of time by larger rivals, the third seized by the government.
Now, shares of mortgage titans Fannie Mae and Freddie Mac trade for less than a fast-food lunch as the market bets that a government takeover is inevitable, if not imminent.
This week was another rumor-fueled ride on Wall Street. Fears of an impending failure of another major financial company were stoked by a speech early in the week by Kenneth Rogoff, a former chief economist at the International Monetary Fund and a historian of financial crises.
"The worst is yet to come," he said of the U.S. financial system. "We're not just going to see mid-sized banks go under in the next few months. We're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."
By late in the week Lehman Bros. Holdings Inc., long on the list of the most at-risk institutions, was said to be shopping itself to potential foreign buyers, including a state-run South Korean development bank.
And shares of Washington Mutual Inc., the biggest U.S. thrift institution, on Friday fell to their lowest level since mid-July on renewed jitters about the Seattle-based company's viability.
August 25, 2008
Too big for the government to let fail - yes or no? Lehman, Fannie, Freddie, WaMu, First Fed and GM get ready for their dates with destiny...
Posted by blogger at 8/25/2008