Daily Update: Friday September 12th

Lehman continued to search for a buyer as shares fell (to $4.43) on Thursday, and in perfect timing for the weekend, which seems the designated parking spot to off yourself and wait for the Fed ambulance to come do something about your situation. We are thinking the Fed amubulance won't be doing any pickups, with too many people already inside (Freddie, Fannie, dead bear in the corner, some local bankers).

Dealbreaker does report that the Fed is trying to line up some Johns for Lehman.

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Oil has now fallen to $100.87 per barrel, despite hurricane Ike moving on Texas for a theoretical beat down. One would imagine prices will bounce around this level for a while before continuing downward. So I guess we can call the rise in prices to $147 back in July a case of speculation after all, world conditions not having radically changed in two months. Still think markets are rational?

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The oil bubble now deflating, CNN informs us that there might be a financial bubble in reverse, with too many people shorting bank stocks that seem to be healthy. They cutely call it a Pessimism Bubble. We are sure they have no idea what they are talking about right now, so long as Lehman is walking the streets with its best "check me out" streetwalker clothing on, and desperate for a buck. But in time, maybe 6 months from now when all the craziness is out of the political and financial sectors, banks will be pretty (reliable) again.

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We don't want to call the Russian incursion into Georgia a sin and thus have them pay a price for such actions. It's all good fun. Georgia threw a pebble at a giant and the giant through a boulder back, gashing Georgian head and taking a chunk off. Lessons learned all around. But maybe vice presidential candidate Palin is right with her belief in God and sin. For now the Russian markets are taking hits, and wealth is disappearing, and someone in the Kremlin is probably saying, "Uhm, should we have really built the whole house on a foundation of oil and gas?"

“In the end these changes are not dramatic,” Mr Medvedev said of the 49 per cent drop in the RTS index since its peak in May that has wiped out $750bn worth of capitalisation. “If the right decisions are made, the situation will straighten out,” he told RIA Novosti, the state news agency. “We will return to the levels that we saw at the start of the year. In any case, I believe this is in the power of the government.

The Financial Times continues:

Falls were driven by energy prices and increased political risk after the Georgia conflict.

Analysts said Russia was experiencing a liquidity crunch of the type that has affected western markets for more than a year. Business leaders engaged in expansion plans are being forced to liquidate positions to meet margin calls.

Remember the last time when things got quirky in Russia and Long Term Capital Management died and almost took the financial system with it? Yea we don't remember either. That was ages ago in the 1997's.

Wisdom for the Day:
Do unto others or your credit markets will tighten up.