Lehman in dire straits

Lehman Brothers, the 158 year old investment bank, is battling for life. Perhaps its future will be known by the time the weekend is over.

Lehman must find a buyer quickly or declare bankruptcy. Finding a buyer is complicated by the fact that the US government is said to be unwilling to provide support to a rescue- as it did with JP Morgan's acquisition of Bear Stearns. Moreover, the authorities are less intimidated by the prospect of bankruptcy than they were in the case of Bear Stearns- they reckon that the fallout can be borne by counterparties because these have had enough time to prepare.

Well, we shall see.... it looks as through the government's reluctance to support a rescue will eventually push Lehman towards a sale at a very low price- bad news for its shareholders including executives holding stocks and stock options in the firm.

And to think that only a few months ago, analysts and media commentators were singing the praise of Lehman and waxing eloquent about how well its CEO had handled its problems, including the challenge of 'communicating' with the markets. When the chips are well and truly down, communication isn't of much help, I guess.

Looking ahead, the big question markets will be asking is: who next? Lehman is not such a big player itself but the message now is that no one is really safe. It's not Lehman's disappearance so much as the possibility of bigger players going under that will give the markets jitters in the weeks to come.