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
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.