Sad Farewell To Lehmans

I cannot say why it's a sad farewell. Many people are of the view that we should not mourn the loss of an Investment Bank (or any financial institution) - live by the sword, die by the sword, and all that. And they are absolutely right. And yet for some reason I had a soft spot for L Bros in the same way that I didn't for Bear Stearns.

Still we may all have to put sentiments aside before too long. Nobody else mentioned this to me yesterday so perhaps I may be off the mark here.. but it occurred to me that if Lehmans has to go through a forced asset liquidation sale this may open a can of seriously fat worms (have you seen the movie Dune?). Despite the fact that hundreds of billions has already been written off on the dreafully mis-priced sub-prime mortgage-backed securities, all of those paper losses have been based on arbitrary valuations. There is no market now for such instruments, and so their value has literally been calculated based on what size of loss each owner has been prepared to take. That is until now (possibly). If Lehmans has to sell assets piecemeal to the highest bidder (where one exists) this will establish a reference price for such assets. I could well be wrong, but my guess would be that in reality, most institutions would prefer not to know exactly what their remaining sub-prime portfolios are actually worth. Worry about that tomorrow, I guess...

One thing is for certain, and that is that there are now a bunch of very talented people looking for their next opportunity. Under normal circumstances they would be snapped up by the nearest bank but these are not normal circumstances and I fear that it might take a little longer than some people deserve. UDH Boy and I did discuss putting in a bid for their truly excellent FX dealing technology. Sadly we were thwarted by lack of cash, and the fact that the domain name udhboysomnambulistfxdealingplatforms.com was inexplicably already taken.

Speaking of UDH Boy, the collateral damage caused by Lehman's failure meant we were exceptionally busy in the latter part of yesterday. This meant that instead of rushing out the door at 6pm he was merrily dismantling the EURUSD market. UDH Girl was, as a result, made very late for the parent-teachers evening and did not see the funny side. The financial world as we know it is welcome to collapse, just not on her time. UDH Boy has put in for an extra bonus to take care of legal proceedings, and surgical reattachment of some rather vital organs.