Just read on Minyanville Buzz that end of March is when the IBs have to mark bonds to market and that could force writedowns and the need to raise capital. No surpsrise that the new Fed loan facility is set to go active today days before the end of the month. So, what if someone knows what LEH is carrying in terms of bonds and have a good idea of what it is going to have to write down?
The discount window changes things. LEH can always buy a little more time and the expectations arent as dire.
That's one reason why I despise the fed. For all the talk of free markets, it's all one, big, giant sick joke. All the fed does is trick people into thinking they have real power to do something to stem the bloodshed, which delays the inevitable, and in turn, wreaks havoc with options' traders - as we all know, timing is everything with options. Who's in charge, Keynes or Smith (or Friedman)? Don't give us some schizophrenic, mutant hybrid. Let's either have free markets, or let's not. Just let us know, so we can put on rational trades without irrational interference.
LEH saying it is being attacked by shorts and rumors that it is in trouble are unfounded. I see them moving their lips but I will believe price action for now. LEH just dropped a $1 in a minute probably on Lockharts comments on inflation. Just shows what little real support there is for the stock if the market goes south.
This got to rumor from short sellers. Discount window is already avaiable to LEH. They practically can mortgage every asset they have in exchange for loan from Fed. In fact, they can be a zombie entity just like the Japanese banks in the 90s if they want to go that way. Disclaimer : I am flat on Leh.