Willi, Me etc I notice that the Lehman debt

[Islandman]

being auctioned is only fetching about 10 cents on the dollar.

How big deal is this? Is this the same kind of junk that the US Treasury is looking to buy from the other financial institutions?

If so then its either many of these institutions will not make it or Paulson is going to overpay by a lot and never recover the taxpayer money.

[Willi]

being auctioned is only fetching about 10 cents on the dollar.

How big deal is this? Is this the same kind of junk that the US Treasury is looking to buy from the other financial institutions?

If so then its either many of these institutions will not make it or Paulson is going to overpay by a lot and never recover the taxpayer money.

LoL

Yuh answer yuh own question.

Samfie all round.

[Me]

Merrill sell theirs at 22 cents on the dollar (which most likely is below its held to maturity value), so I expect the government to be paying slightly more than that. However, if they start talking about paying 70 cents on the dollar, that is where it becomes a problem (depending on how far down the subprime ladder) and it is simply bailing out their friends.

This whole fund idea is lacking any details when it comes to the subprime securities and derivatives and Paulson and friends don't even seem like they have a clue on how to handle it (worse Bernake).

Given the ability of Barclays to easily buy Lehman's key assets and wells fargo's ability to buy Wachovia without any government backing, they should probably scrap the whole big bank portion of the fund, maintain the commercial paper piece, let the small guys fail and allow the banks with a strong capital base (Bank of America, Wells Fargo, JP, US Bancorp and the foreign ones to buy the failed entities.

[Willi]

Merrill sell theirs at 22 cents on the dollar (which most likely is below its held to maturity value), so I expect the government to be paying slightly more than that. However, if they start talking about paying 70 cents on the dollar, that is where it becomes a problem (depending on how far down the subprime ladder) and it is simply bailing out their friends.

This whole fund idea is lacking any details when it comes to the subprime securities and derivatives and Paulson and friends don't even seem like they have a clue on how to handle it (worse Bernake).

Given the ability of Barclays to easily buy Lehman's key assets and wells fargo's ability to buy Wachovia without any government backing, they should probably scrap the whole big bank portion of the fund, maintain the commercial paper piece, let the small guys fail and allow the banks with a strong capital base (Bank of America, Wells Fargo, JP, US Bancorp and the foreign ones to buy the failed entities.

Wait till the credit derivative swap dem start like...as de man seh...that is the approaching Derivative Death Star!