- Farrell: What's Different On This Black Friday
- Crescenzi: Claims Level Suggests End to Job Losses
- Schork Oil Outlook: Gas Bulls Pinning Hopes on Mother Nature
- Busch: The Debt-Interest Rate Paradox
- Busch: Markets Smell a Country Rat
- Schork Oil Outlook: Mission Impossible For The Bears?
- Losey: Asset Allocation At Retirement
- Farrell: Obama Hectored, Ignored and Restricted?
- Don't Dwell on Investment Mistakes; Move on, Like Buffett
- Hirschhorn: Greed...or Fear
- Portfolio Prep for Next Week: 'Don't Get Crazy'
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Surprising Options Trades in TiVo Shares
- UAE Central Bank Stands by Banks Amid Dubai Crisis
- UAE Markets Seen Limit Down on Monday Open
- Banks With The Biggest Exposure to The UAE
- Dubai's Debt Woes Signal New Era for Creditors
- US Treasury Wants Banks to Do More to Ease Mortgages
- Tiger Woods Accepts Full Blame for Car Crash
- Next Week: Cash In Now Or Wait For A Santa Rally?
- Fed Audit Would Hurt Economic Prospects: Bernanke
- Big US Banks May Be Forced to Raise Capital: Bove
RSS FEED
CNBC Guest Blog
Text Size 
Fannie and Freddie were too big to fail. Bear Stearns was too "interconnected" to fail. At the time of the Bear crisis Wall Street didn't know what would happen to the credit default swap market if one end of it (Bear Stearns) started to unravel. But there has been a default event when the government took over Fannie and Freddie and the credit swap market handled it. While the debt outstanding of those two entities was not trading at depressed levels, the market still handled it. The market will handle the demise of another financial institution. We can have no more government bailouts.
I don't think that Lehman [LEH
Loading...
()
] will default, but it's way past time for all the plans that have been floated to be put into action. Lehman can't raise capital for itself, so they need to sell Neuberger and spin off the commercial real estate portfolio. A spin requires someone to put in capital and there has to be an investor at some price. Lone Star took some toxic waste from Merrill [MER
Loading...
()
] at $0.22 on the dollar. It was probably worth a lot more (or why buy it ?), but Merrill had no choice but to sell to put to rest the rumors of its troubles. Lehman has no choice and CEO Fuld needs to bite the bullet or the stock will continue to go lower.
Goldman [GS
Loading...
()
] and Morgan Stanley [MS
Loading...
()
] report earnings soon, and AIG will announce its reorganization on September 25. The market needs additional data points from these leading financial companies before it can have a hope of having anything more than a trading rally. Washington Mutual [WM
Loading...
()
] seems to be on the ropes and if failure is in the cards, better to get it over with.
There is an ocean of liquid capital available. Money market funds have something like $3.5 trillion, sovereign wealth funds and private equity pools have trillions more. But there has to be some sign of stability in write-offs before there can be any confidence for additional investment.
What are Options Saying About Financials?
_______________________________________
Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC. 
Data is a real-time snapshot *Data is delayed at least 15 minutes