The Government is "arranging" (aka, paying/incentive-fying) a bailout of Lehman through a consortium. Having companies bailing each other out is following the blueprint to repeat Japan's 10 year recession. In the end it may avoid a depression, although Jim Cramer now thinks we risk one. If USA can avoid a depression, with all these actions it's sure to have a longer recession, hopefully not as long as Japan's 10 year recession. In any event, why the heck is the government "arranging" bailing Lehman out, when Lehman bonuses for 2007 was almost 6 BILLION dollars? Those execs should be smart enough to handle their own business. Perhaps if Lehman had paid 10 billion in bonuses, maybe they would have better management.
Next bail out is lining up, as Moody's has cut Washington Mutual credit rating cut to junk. The picture reflects my opinion of WaMu Execs trying to get millions in April 2008 with losses mouting over 1 billion, resulting in only 5 months later near bankruptcy for the company. I am not surprised of WaMu's issues, but I am shocked that Moody's cuts a rating of a company to junk BEFORE it fails! In another two years, Moody's may start cutting ratings ahead of the internet, stock price, and general consensus.
Maybe the execs at Leh and WaMu can spin it to get what they deserve for such good work.
Next rumblings is insurance industry, and I hope I'm wrong. Looks like AIG is leading the pack with cost of insuring their debt jumping 30%.
The growth industry in the US is to take a good company, do money shell games (fraud), award Billions in bonuses, walk away and have taxpayer cover the losses. Freddie Mac, Fannie Mae, IndyMac, Bear Stearns, Countrywide, Lehman, and WaMu execs can start a how-to seminar tour. Unfortunately, a shrinking industry is trusting America's financial stability and debt, as Japan is slowly joining the ranks of China and Russia in avoiding USA debt.
UPDATE 9/22/08, Lehman is bankrupt, and execs get 2.5 billion in bonuses.