Lehman CDS Results, etc…

Posted: October 10, 2008 at 2:18 pm by Chuck

It could have been worse, but it’s not "great" news. Will this be enough to temporarily calm the markets?

LEHMAN CDS AUCTION RESULTS: VALUE SET AT $0.08625/DOLLAR V $0.0975 INITIAL

There’s a lot of talk about what the G7 meeting might yield this weekend. Global cooperation in this financial crisis is important, but the globe doesn’t have a great track record on the "cooperation" front. Suggestions of closing stock markets, extending/instituting short sale bans, injecting capital, and buying stock, are being bandied about. No decisions have been made, though. This is part of the great unwinding of leverage, and it isn’t pretty, is it? Forget about calling a bottom. No one knows how much unwinding has to take place. Hmm…isn’t that a big part of the problem here? Lack of honesty in the financial sector. If the government wants a restoration of confidence, then telling the truth would be a place to start. Remember, we’ve gone through "subprime is contained", kitchen-sink quarter earnings reports, "we’re well-capitalized" CEO statements before implosion, to numerous bottom calls from financial media. At what point did anyone think they were bolstering confidence in the markets?

Some news items:

ICELANDIC PM: UNSURE WHETHER OR NOT AN ATTEMPT TO PEG CURRENCY WILL OCCUR ONCE MORE, PAYMENT SYSTEM MAY RESUME NORMAL OPERATIONS IN A FEW DAYS
- Notes the country is not bankrupt