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Lehman, 158 years old, is dying. Merill Lynch is quite likely next in line. AIG and WaMu are in critical condition. This a week or so after the collapse of Fannie and Freddie.
This is what happens when you put Republicans in charge of the economy and they throw regulation out the window. This is Sununu's radical free market dream - and our nightmare - realized.
This is a Nation of Whiners' Open Thread on the Economy.
(Absolutely frightening words from PermaBear Roubini below the fold)
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.