Measuring the effects of a LEH bankruptcy

Discussion in 'Trading' started by Daal, Sep 13, 2008.

  1. Daal


    I'm reading that the ny fed meeting is discussing a potential 'orderly liquidation' of LEH. this could be a disaster since everybody who extends credit with merril lynch and morgan stanley will stop with fears that they themselves will have to face this mess. either LEH gets acquired or fed backstops and the stock goes to $1
  2. BSC then FNM and FRE now LEH. Next WAMU, MER, C, Morgan Stanley, .......the dominoes have started. I actually think that the Treasury take over of FRE and FNM is to allow direct treasury lending for mortgages. The treasury can now force mortgage rates down by directly lending through FRE and FNM and having control. Lower rates are key to stopping the subprime spreading to alt-a and prime. Also expect FED to lower overnight rate to 1% soon.
  3. zdreg


    orderly liquidation is an oxymoron.
    it will never happen for the reasons you outlined above
  4. oriol88


    it's positive for the leh shareholders that the fed takes this issue like a sistemic catastrophe
  5. Daal


    I dont think so, im long and now I wish I was short. I think fuld throws the towel after sitting at a table with the entire wall street, the ny fed, treasury, sec looking at him and calling him a moron. I dont think he will have to nerve to talk about his shareholders(lol). but there is also delaware corporate law involved, shareholders can vote down deals and get a raise, this is protecting the downside here. maybe I wont lose much
  6. I agree Fuld has been spat on by his industry freinds. If I was him I would say f u all we are going chapter 11 and use the statutory process to trade out of this. Including asset sales.
  7. Daal


    if they do a LEH 'auction', selling all the pieces of it across wall-street it could be pretty good to shareholders. stock would soar, the market was clearly pricing in a wipe out