Bizarre repercussions of Lehman bankrupcy
The only word which describes what is going on right now in the markets is "Bizarre".
Take a look at this story-this sums it up really well. Great job by Tom Cahill at Bloomberg.
To tell about assets of hedge funds being inaccessible, being stranded in Lehman accounts. To tell about a stake in UBS worth $1.3 Billion being stuck.
Words like inaccessible, stranded and stuck are not used for assets of a third party. This is truly bizarre.
It is understandable that assets of the firm itself are seized, but the Government should make sure that assets of third parties are available fast for trading. This is nothing to do with Lehman-this is a Government's responsibility to honor that assets held even at a failed firm-as long as the assets are simple in form like stocks, bonds, simple call and put options trading on exchanges, etc or cash be completely accessible to the clients of the bankrupt firm.
There is a limit of course-like the $100K guarantee by FDIC, but still-stocks and bonds held at a firm should be monitored by the Government and such a thing is absolutely a loss of faith in the Government's ability to do basic stuff-respect right to property and assets.
If this goes on longer and assets of third parties are frozen in Lehman, you can bet that the Governments (US, UK) will be sued and they will pay through their noses for this strange, bizarre development.
Maybe allowing Lehman to fail was not a good idea after all-the Government should have taken over as it did Fannie and Freddie. Because they now have a very very difficult situation to deal with.
Sanjay
Take a look at this story-this sums it up really well. Great job by Tom Cahill at Bloomberg.
To tell about assets of hedge funds being inaccessible, being stranded in Lehman accounts. To tell about a stake in UBS worth $1.3 Billion being stuck.
Words like inaccessible, stranded and stuck are not used for assets of a third party. This is truly bizarre.
It is understandable that assets of the firm itself are seized, but the Government should make sure that assets of third parties are available fast for trading. This is nothing to do with Lehman-this is a Government's responsibility to honor that assets held even at a failed firm-as long as the assets are simple in form like stocks, bonds, simple call and put options trading on exchanges, etc or cash be completely accessible to the clients of the bankrupt firm.
There is a limit of course-like the $100K guarantee by FDIC, but still-stocks and bonds held at a firm should be monitored by the Government and such a thing is absolutely a loss of faith in the Government's ability to do basic stuff-respect right to property and assets.
If this goes on longer and assets of third parties are frozen in Lehman, you can bet that the Governments (US, UK) will be sued and they will pay through their noses for this strange, bizarre development.
Maybe allowing Lehman to fail was not a good idea after all-the Government should have taken over as it did Fannie and Freddie. Because they now have a very very difficult situation to deal with.
Sanjay
Labels: general commentary
posted by Sanjay "John" Gandhi at 11:17 PM
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