So Uncle Sam decided not to save Lehman Brothers, at risk here not only the company as a investment bank but also the credit defaults swaps derivatives market that Lehman it's holding in it's balance sheet.
The derivatives market it's so huge it dwarfs any other financial instruments, last count it's about USD500 Trillion markets worldwide. It's created to add more liquidity to the market end up destroying the very reasons it was created that is to add liquidity for banks to offer more credit and subsequently more debts. Lehman Brothers rank around 6 in market exposures.
``We've fallen so far off the edge of the earth right now that we can't even begin to describe what we are seeing,'' said Jim Bianco, president of Bianco Research LLC in Chicago. ``Nobody begins to know what will happen because we've never come to anything remotely close to this before.''
Will it create a systemic meltdown of the financial institutions at Wall Street? Stay tuned there will be a lots of side and main shows to see from now onwards, fasten your seat belts!
Meanwhile price of gold rose almost 2% today, investor look for safe haven to park their funds.
Buy Gold!
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