Central Banking Joke

Ben Bernanke, Alan Greenspan, and Jean-Claude Trichet are in the duck blind and a bird flies overhead.

Bernanke looks at it and says, "Looks like a duck, flies like a duck... it's probably a duck," shoots at it but misses and the bird flies away.

The next bird flies overhead, and Monsieur Trichet looks at it, then looks through the pages of a bird manual, and says, "Hmmmm...green wings, yellow bill, quacking sound...might be a duck." He raises his gun to shoot it, but the bird is long gone.

A third bird flies over. Greenspan raises his gun and shoots suddenly, brings it down, and turns and says, "Can someone go see if that was a duck?"

Yikes Its Ike!

"The latest track models are converging on the Houston area, between Freeport and High Island. That's bad news from a refinery perspective. The question is increasingly shifting from "where" to "how strong", and with Ike that's a tough question to answer.

The threshold to watch for as the storm approaches landfall is 100 knots (115mph). For every 5 knots less than that the damage drops off rapidly, and more importantly the recovery times improve. If the storm landfall intensity is over 100 knots, we start to see damage that requires major structural work and therefore recovery times start to skyrocket."

Chuck Watson in a report to The Oil Drum

...and this time put some stank on it.

To Serve the Public

Now here's something with some traction. If you can't trust the Washington Post who can you trust?

The Fed and Treasury are reported to be weighing in on the sale of Lehman and are cobbling together a deal 'before Asian markets open on Sunday.'

Sounds hauntingly familiar, like the Bear Stearns bail out. Probably won't cost the a dime as well.

Little Lehman, happy at last? Let's hope so.

Who's next? Plenty for everybody (on the list).

Hank and Ben are going to serve the public. Medium well.


U.S. Government Assisting in Sale of Lehman Brothers
By David Cho and Heather Landy
Washington Post
Thursday, September 11, 2008; 5:40 PM

The Treasury Department and the Federal Reserve are helping Lehman Brothers put itself up for sale. The details are not finalized, but sources familiar with the matter say the purchase is expected to be completed and announced this weekend before Asian markets open Monday morning.

The Fed and Treasury are talking to a wide range of firms and examining multiple scenarios for the sale of the venerable investment brokerage. (Give us a "B", give us an "A", give us a "C", give us a "K".... BACKSTOP! What do we want? BACKSTOP!)

Lehman Brothers, which had been anxious to show it could weather the credit crisis that contributed to the firm's $3.9 billion third-quarter loss, said Wednesday that it would sell a majority stake in its investment-management division, slash its dividend and spin off about $30 billion of real estate assets.

The announcement did little to calm investors' concerns that Lehman, the smallest of the four major Wall Street investment banks, might suffer the same fate as former rival Bear Stearns, which was acquired by J.P. Morgan Chase in a deal regulators brokered in March after a bank run that shook the securities industry.

Lehman's share price fell nearly 40 percent to $4.22 at the end of trading today, continuing a precipitous fall from more than $60 a share as of February.

Goldman Sachs Group reduced its rating on the company, with one analyst saying that the restructuring "fell short of what was necessary," the Bloomberg news service reported, while Moody's Investor Services argued that the firm faced a cut in its credit rating unless it quickly enters a "strategic arrangement" with a stronger partner.

During a conference call with Lehman executives yesterday, analysts pressed for assurances that the $5.6 billion of write-downs that the firm disclosed for the quarter ended Aug. 31 -- primarily for declines in the value of assets tied to residential mortgages -- sufficiently reflected the severity of the troubles in the real estate market. The concern demonstrated the skepticism that remains even after last weekend's federal bailout of government-sponsored enterprises Fannie Mae and Freddie Mac, which play a vital role in supporting the mortgage and housing markets.

"There's still an element of doubt in terms of confidence of the financial players, and that's not going to go away just with the bailing out of Bear Stearns and the bailing out of the GSEs," said Michael Kastner, managing director of fixed income at Sterling Stamos Capital Management in New York. "What we're going to need to see is at least one quarter where the financial institutions don't show write-downs and do show profits and an ability to grow their business."

Another Lehman Leak: Bank of America In Talks to Buy Lehman

Equity markets took off in the last 30 minutes of trading as the Wall Street Journal reportedly released a story that "Bank of America is in talks to buy Lehman Brothers citing a source" according to Bloomberg network news which was flashing the story prominently as US markets were closing.

They are back-tracking a bit now, after hours, as cooler heads prevail no doubt, but this is getting a little embarrassing.

We do not know if this is the real deal, just another Lehman leak, or if Bank of America is merely participating in the ongoing negotiations to buy Neuberger Berman which are not expected to close until October.

Is Bank of America the stand-in for the Korean Development Bank? Is The Wall Street Journal a serious business news source or the Chosun Ilbo? Is the attention to serious reporting on Bloomberg getting as lax as it appears in the last few weeks?

There were quieter rumours circulating that HSBC was going to put in a bid overnight, after Goldman Sachs denied rumours that they were going to bid.

Does Lehman see a marriage ring every time someone takes their phone call?

We understand that there are quite a few funds holding the common shares and preferred debt heavily, but this may be getting a little out of hand. That ramp up of the financials ahead of the leak was rather heavy handed.

More to follow as it comes out, but for now as always, more questions than facts. At some point the rumours may be true, but the deterioration in standards of transparency and honesty in our financial system is odious, and the decay of the notion of stewardship in general in the U.S. is becoming appalling.

After the close:

Reuters
Lehman looking for buyers for entire bank: source
Thursday September 11, 4:56 pm ET

NEW YORK (Reuters) - Lehman Brothers Holdings Inc is in talks with potential buyers to sell itself, a source briefed on the matter said. (That has been the case for the better part of this year. This is not news - Jesse)

A few banks are looking at books that went out Thursday, the source said, declining to identify any potential acquirers. (Every serious bidder that has looked at the books so far has run away, or put in a lowball bid. This deal is going to take a backstop from the Fed, a greater fool, or a miracle. - Jesse)

The Wall Street Journal reported that Bank of America was in talks to buy Lehman but that any deal was "far from certain." (This is not how Bloomberg released the news into the market close. They made it appear like a breaking news story which was a seriously disappointing lapse in standards. - Jesse)

The investment bank's survival was called into question as its chief executive scrambled to sell assets to cover losses from toxic real estate investments, sending shares down as much as 46 percent.