Monday, September 15, 2008

Is Lehman Failure Equivalent to Katrina's Levees?

Wall Street was mauled today by the news that Lehman Brothers filed bankruptcy, Bank of America buys Merrill Lynch, and AIG stock price off 60% on financial market fears.

While I am inherently an optimistic guy, I can't help but equate Lehman to one of the first levees to break during Katrina. After the first couple of levees broke, there was a disastrous domino effect that remains fresh in people's minds today.

So, I am hopeful that the AIG levee is somehow bolstered by the Fed this week. If AIG is spared, what other AIG's are out there that we need to worry about? Hint: look at the companies heavily into Lehman and Merrill and some of the other heavily distressed financials.

If AIG falls this week, then we really may have a Katrina effect on our hands.

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