Sunday, September 14, 2008
To all Beneficiaries, affiliates and associates Fundacion Pan America (FUNDAPAN) will not convert Gold to Federal Reserve Notes…
Have you heard?
It is now clear that we are again – as we were in mid- March at the time of the Bear Stearns collapse – an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer.
Here's a quick look at what's happened at Lehman over the last 6 months or so.
March
The demise of Bear Stearns focuses attention on which Wall Street firm, if any, is next
April
The firm raises $4bn in capital, funds it basically says it doesn't really need for asset writedowns it doesn't really have. CEO Richard Fuld says that the worst of the market crisis is over, but cautions that the environment remains 'challenging'.
May
Lehman announces that 5% of headcount, 1,500 jobs, will go.
June
The firm says that it estimates that it has lost $3bn in the second-quarter due, in the main, to asset writedowns, and says that it will raise an additional $6bn in capital. Fuld removes the firm's Chief Financial Officer and the Chief Operating Officer from their posts.
August
Rumors persist that Fuld is looking to sell all, or part, of the firm's Investment Management Division, which includes asset management, hedge funds and private banking. He is also said to be actively looking for investors to shore-up the firm's capital base.
September
2nd - the story breaks that Lehman is in discussions with the state-owned Korea Development Bank (KDB) over a possible investment in / buyout of the firm.
8th - 9th - Lehman shares fall 52% as stories surface that the firm is struggling to find investors and that the KDB talks have failed over price-related issues.
10th - the firm issues its preliminary third-quarter earnings a week early, saying that it lost in the region of $3.9bn. Lehman outlines something of a strategic plan in an attempt to reassure the market, but the plan is short on specifics and fails to reassure investors.
11th - Lehman's shares fall another 42%, and bankers are said to be pouring over the firm's books trying to come up with a deal. Lehman's stock had now fallen over 75% in just a week.
12th - 14th - Wall Street's finest are called into a series of meetings with the US Federal Reserve, as the central bank tries desperately to pull together a deal / bail-out ahead of the opening of the markets in Asia.
- PAN News Network -
