The last week that was ....

Last week was momentous; Fred and Fan were nationalized, so was AIG, then all of the Lehman Brothers went belly up- with explicit backing of the taxpayers, read Lehman's bankruptcy records- Merrill Thundering Herd was corralled in by BofA, and the Treasury wants to spend $700 bn, why not $1000 bn, as Kenneth Rogoff has correctly suggested in The Financial Times. Now we learn that Morgan Stanely and no-longer Goldman Sachs will be "independent", in their usual sense, and will be regulated like other banks. Quite sobering stuff...

We thought there were a few laughable items from last week:

- Lehman Canary Wharf building owners are worried that their lease agreement with Lehman, which is to run through 2033- they are predicting that Lehman would survive until then- may not be honored. No kidding. But the interesting part is that the lease is guaranteed for a solid 4 years by none other than AIG! (WSJ, Sept 17, 2008)

- last week CBOE in Chicago was such a crowded place, that some traders carried extra pens in their pockets; the rationale: "if they dropped one on the ground, it would be impossible to pick it up." (WSJ)

- Ross L. Smotrich was a "top-notch" RE analyst for Bear Stearns, before it was given to JP Morgan with the help of the Fed. He lost his job, of course, but landed a new one quickly with Lehman. Mr. Smortich, who according to Institutional Investor magazine was the 2nd best RE analyst in 2006, may again be out of the job. (WSJ) We wonder where he would be employable: how about WaMu. Quick, before it goes belly up!

One factoid: what is a common characteristic between Bear Stearns, Lehman Brothers, AIG, and Merrill Lynch? Aside, of course, from the fact that they all were run by billionaire fools.

A: they survived the Great Depression banking crisis. But, not this one, so when analogies are made with the last great banking crisis, it is worth remembering that while this is the greatest since the Great Depression, but it may well turn out to top it.