Love did not triumph this weekend, and it looks likely that the "lonely death" scenario will play out for Lehman Brothers. It was too much to ask of the CEO convention downtown to recognize this most obvious pool of untapped wealth. Meanwhile, faith is drying up at an alarming rate, as default protection spreads widen all over the place. Hope is out fishing, or says its secretary, who has been working all weekend fielding calls from the Fed.
The credit crunch is in fact a faith flameout, and we now believe in nothing but cold cash and a shotgun. And even cash appears vulnerable.
The latest indications suggest that we will not have a new overlord on Monday, and my hopes for a relatively sane de-employment process are fading fast. Lehman has hired Weil, Gotshal & Manges to represent its impending liquidation. Unless something unexpected happens tonight, everything must go, go, go. ISDA will open on Sunday to prepare for this possibility. Monster truck show to follow.
There is one thing I don't quite understand: why can't Lehman simply pretend nothing happened, and open for business on Monday? One possible course of action: spit on the downgrades when they happen, start laying off most of its staff, sell off its good assets, and simply become the "bad bank." Can't we collectively turn a blind eye to the bad stuff, and conveniently forget to discover the true MTM on the piles of commercial real estate and its like? The potential negative net worth would be contained in this new incarnation of Lehman, and it will simply become a long-term vehicle for anyone who wants any piece of it.
This is attractive to me mostly because it involves severance pay. I am calling hope, but the line is busy.
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