Hiya Todd,

Assume for a moment that your ears hear true rumblings and not the evil machinations of someone with a big short position in Lehman Bros.

Given that Lehman is roughly twice the size of Bear Stearns, if my memory works correctly; and given that Ben Bernanke testified under oath that JPM was the ONLY bank strong enough to take BSC on; does that mean that JPM will also have to swallow LEH? Or that NO single other bank is strong enough, and LEH is going to be parted out like a 57 Chevy that threw a rod?

Or is this The End Of The World As We Know It?

1/2 quadrillion $'s in derivatives, all intertwined

the oct. 27, 1997 mini-crash, wherein trading on the nyse was first haulted for 30 min and then later suspended for the rest of the day, celebrated it's 10th anniversary last year

back then, i wonder how many derivatives there were

on oct. 26, 2007, the s and p closed near an all-time high

derivatives, apparently, are bullish for the market

what will the next "circuit breaker" (trading curb) look like???

when so much false hope and denial finally succomes to disaster reality, it is bound to get UGLY, UGLY, UGLY!

I took a cursory look at the puts on Lehman today. It looked like a beehive, but I don't know how it compares with the blatant activity which preceded Bear's demise.

Today's rumor is that LEH will sell part of itself off to raise cash. It's too big for a BSC-style takeover, so it will die a slow death, one piece at a time.

Television's C-SPAN is usually the cure for insomnia, but not on June 3, when the Senate Commerce Committee sat to hear a panel of experts on Commodities. Michael Greenberger is the former head of the CFTC. He testified that 30% of the East coast heating oil is controlled by Morgan Stanley and Goldman Sachs, and that their positions were established by working through Dubai and London futures markets, unregulated by our CFTC, and they certainly are not dealers. The rationale put foreward by panelist George Soros, is that dollars are falling in value, wheras all classes of commodities are rising, therefore, rolling futures contracts over into new contracts and preserving value by not selling is the outcome. De facto hoarding. Senator Olympia Snowe noted that heating oil rose $.30 in a single day, and this is not the season of demand. (June!) She asked for recommendations, and I will cite Michael Greenberger for asking that the 2006 law be revised to include OIL as a regulated good from all brokers, domestic or foreign, to prohibit end-runs by the Dubai/London groups. Investment bankers are now using the internet to disguise the actual point of trade, to appear to be U.S. based or CFTC compliant. Dr. Mark Cooper offered that the non-delivery players need limits on how much of a market they can purchase a controlling interest in, or they should be forced to "tie assets to positions", which is to say, "fill your silo, or stay out of this market." He went on to say that West Texas Intermediate Crude is about 90% speculation, so much for benchmarks! When asked by Senator Cantwell, about how much of the price is actual oil, Dr. Cooper said $35 to $65, and the rest is half retailing and half speculation. Investment bankers were crushed by the low-quality assets behind their bonds, and the tsunami of foreclosures, so it was a loophole named Enron that gave them the insight to hedge with the actual commodity. This is another unwind that will slam the market, or put some bankers in the slammer. W.B. in K.C.

Copy and paste to hear testimony on OIL and investment banks.
http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=1c9f4e27-376a-49c8-a244-25730c4bbbe8

Walt in KC