any idea how you trade this?

in my opinion this is why I don't expect a plunge in western markets - the bubble has already gone.  had this weekend happened back in 2007, it would have triggered a collapse

btw. why doesn't congress move to impeach the following (its possible to impeach someone after leaving office):

Chairman Greenspan
Treasury Secretary Snow
President Bush

Also, what are the chances of the next Attorney General (Fed or NY) charging all former CEOs and a number of other executives under the RICO statutes or with conspiracy?

futures could bounce if a package is announced by the large banks, a la long term capital style.  noone wants to see a disorderly liquidation.

as a foreigner can I ask what national government would EVER allow its major banks to get into so much trouble? this is going to criple the US economy growth for years to come and the new new york will now be HK or Singapore

to what extent is all this already factored in? financials are in big trouble, but the rest, we shall see...

what kind of squeeze?

Check out bhp

Too many bears.  Too many people hoping for collapse.  Too contrarian

Matt - why was the Refiner taken off the watch list? Isn't this arguably in a consolidation phase?

wm - underlying 3.03 after hours

good trade Delane

Everyone's looking for a panic washout.  Consider:

1. Lehman is down 70% in 3 days.  Suprisingly, the rest of the market isn't that worried about the imminent collapse of the 5th biggest bank.

2. Hedge funds have been forced to liquidate resources stocks.  Shares down significantly over the past few weeks.  Individuals are gone from the market.  When hedge funds liquidate, its not their own money, they can do it somewhat dispassionately and so aren't going to flood the market will sell orders all at once but liquidate over a number of days/months. 

Do we need individuals selling to get a panic washout?

According to this bloomberg article... The Fed has created the situation where people entering contracts with Lehman as a counterparty would prefer for Lehman to fail so that the counter party in effect becomes the Fed

Joyous Loathing at Lehman Brothers' Collapse: Michael Lewis

Commentary by Michael Lewis

Sept. 11 (Bloomberg)-- To see the mental state of financial markets at the moment you need only to sit at a computer with an Internet connection and watch investors respond to journalism.

On Tuesday morning Bloomberg News quoted an unidentified person inside Lehman Brothers Holdings Inc.saying his firm had tried and failed to raise capital from the Korean Development Bank. This report came on the heels of an earlier one by Dow Jones in which a named person who regulated the Korean Development Bank denied such a thing had happened -- but no matter.

A few minutes after Bloomberg News posted the piece, it was the most-read news of the day, and Lehman's shareswent into a free fall. Fifteen minutes later they had lost almost half their value.

What's interesting, among other things, is the total lack of reflection in the markets. Who had heard of the Korean Development Bank? Who knew what it did, or whether the people inside it were shrewd assessors of subprime-mortgage portfolios?

Basically no one, I'd guess. And yet a single report from an unnamed person inside Lehman that some Koreans had considered, and then passed on, investing in the firm was enough to cause the shares to crash.

And all that had really happened was that KBD proved it may have finally grasped what should be for Asians a cardinal investment principle: Never buy anything an American investment banker is selling.

Lehman Doomed

What one can see from this event is that Lehman Brothers is doomed. It's doomed, in part, because it still owns all sorts of crappy assets at inflated prices.

It holds tens of billions of dollars in subprime-related assets of the sort Merrill Lynch & Co. just disgorged at 22 cents on the dollar. But that's probably just the beginning.

There's no happy reason they haven't explained in detail their exposure to credit-default swaps. No one -- not its big investors, not the analysts and journalists who cover it, not even, perhaps, the Korean Development Bank -- has had a clear view of its assets and liabilities.

This opacity was once a huge advantage: the people outside assumed the best. It's now an even bigger disadvantage: people outside assume the worst.

But Lehman is doomed for another reason: People are enjoying its failure. The pleasure and interest the markets now take in seeing it fail now exceeds their pleasure and interest in seeing it survive.

Interest in Failure

This is one of the many unintended little side effects of the government bailout of Bear Stearns Cos.: to greatly reduce the interest of the people who do business with Lehman Brothers in the survival of Lehman Brothers.

All those people whose affairs are intertwined with Lehman might have pressured them to handle their problems more briskly and intelligently -- and might also be trying to keep it afloat. The U.S. government has made it possible for them to instead stand back and watch with some detachment and even pleasure as Lehman collapses.

After all, the Federal Reserve will give them their money back, re-insure their credit defaults, take another pile of these distressed assets out of the market. And when the dust settles they can go in and poach Lehman's business and its smarter employees.

The Bear Stearns bailout was supposed to prevent the crisis from rippling through Wall Street. Obviously it hasn't done that. It's merely thrown the crisis into slow motion and prolonged the agony.

And it's given the Korean Development Bank whole new powers.

( Michael Lewisis a Bloomberg News columnist and the author, most recently, of ``The Blind Side.'' The opinions expressed are his own.)

To contact the writer of this column: Michael Lewis at mlewis1@bloomberg.net

Last Updated: September 11, 2008 00:04 EDT

It is just bad practice to release hugely market sensitive announcements during trading hours.  In any case, most exchanges suspend a stock for 15 minutes after market sensitive announcements, so either way, the announcement will be factored into the next trade

The hypothesis is that non-US markets may start ignoring what is hapenning in the US (and also the UK) and start moving ahead.  If that happens then any further moves down in the US would arguably be tempered. 

In the US, the selloffs so far have been extreme in financials, its arguable that the retail investors are gone from the market.  Really, short of a crash, are we not going to see a tempered downward path.  Who is left to sell up? As an example Merrills is trading at $24 rather than $90.  How much further do you want shares like this to go? Are they worth nothing?

Some evidence this market has already bottomed (^AXJO - http://finance.yahoo.com/echarts?s=%5EAXJO#chart1:symbol=^axjo;range=2y;indicator=sma(50,150)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined) - market has not moved in last two months and some flattening of MAs. 

This market bottomed in October 2002 in the last bear whereas the bear is viewed as having lasted longer in the US through to 2003.  Australian market was decimated from shorting in Jan 08.

The bearish views are so thick in the air at the moment - I'm in London - that I could almost slice it with a knife.  M&A is dead quiet and fund issues are quiet as well.  People are saying the next 2 years are going to be horrible.  On a contrarian indicator its almost a buy indictator.  Some indication there are plans to buy big into financials.  Certainly, you have to wonder why the market can hold its losses to 1% for most the day when Lehman is down 30+ percent.

Matt - do you have a view on this comment?

perhaps you could buy your hedgie friends a subscription to this site so they know when to buy and when not to buy. Then hopefully their commodity funds wouldn't go belly up and so resources stocks could actually reflect fundamentals based on china rather than including a great big discount due to anticipated fire sales by your hedgie friends.