I responded with "Screw Northern Rock, It's Battle of Britain Day".
On 15 September 1940 the German's attempted to draw the Royal Air Force into a battle of annihilation with their largest and most concentrated daylight attack against London. They sent 620 fighters and 500 bombers against the R.A.F's 630 fighters.
Ironically September 15, 1940 was also the day that Churchill had decided on to visit the headquarters of Sir Keith Park, commander of Fighter Command's 11 Group which protected southeast England i.e. where the German's were headed.
At 2:35 Churchill, who had been watching the plotting table where the waves of bombers coming in since 10:10 were depicted, asked Park "What other reserves have we?"
Park replied "There are none."
From James B. Stewart's New Yorker piece, The Eight Days:
MONDAY, SEPTEMBER 15
The beginnings of a run.
Bruce R. Bent, Sr., the chairman of the Reserve Management Company, which ran the country’s oldest money-market fund, had just arrived in Rome, where he was planning to celebrate his fiftieth wedding anniversary, when his son, Bruce Bent II, the firm’s vice-chairman, called him from New York. In his absence from the office, Bent relied on his son, whose shoulder-length hair and beard made him look more like the philosophy major and drummer he once was than like an executive of a renowned money-market fund. The subject they discussed was the Lehman bankruptcy. The Bents’ money-market fund owned hundreds of millions of dollars of Lehman debt securities.
The elder Bent, along with the firm’s late co-founder, Henry Brown, had invented the money-market fund, in 1970, and the company’s Primary Fund had begun operating in 1971. At that time, yields on bank deposits were capped at about five per cent, but short-term U.S. Treasury bonds, which could be acquired only in ten-thousand-dollar increments, were yielding eight per cent. Now, thanks to Bent and Brown, even small investors could participate in the higher yields of Treasury bonds by pooling assets. The investments were ultra-safe, and since they had short-term maturities there was little risk from changing interest rates....Here's what we posted that day:
...Still, even as Paulson was speaking, the Dow Jones Industrial Average was dropping. By the end of the day, it was down five hundred and four points, or 4.4 per cent—the biggest one-day percentage drop since the first day of trading after September 11, 2001. Traders, aware of A.I.G.’s mounting collateral calls and the ongoing meetings at the New York Fed, were unloading positions. A.I.G. shares dropped sixty-one per cent.
The last remaining independent investment banks on Wall Street were hit hard, too. Morgan Stanley shares dropped fourteen per cent, and Goldman’s twelve per cent....MUCH MORE
3:42 a.m.
Which States are Most Populated by Neurotics?
3:43 a.m.
Fed Widens Collateral, Banks Set Up $70 Billion Fund
3:47 a.m.
Bernanke Violates Federal Reserve Act Section 23A
4:03 a.m.
Is Washington Mutual Going to be the Next Bank to Fail? FDIC Would Be Out of Money (WM)
5:26 a.m.
Federal Reserve Accepting EQUITIES as Collateral
...So there's really no call for the tone of this headline at ClusterStock (the body of the post is pretty good): Fed Now Taking EQUITIES As Collateral? Have They Gone INSANE?
The Fed's actions are simply informing us that they are one step away from stashing currency filled bottles in exhausted gold mines.6:51 a.m.
Things that make you go "Hmmm" (AIG; LEH)
Watching Lehman crossing on the tape at two bits. The world's largest property casualty insurer in the $5's. Hmmm.6:23 a.m.
There's something wrong with our bloody ships today, Chatfield.*
*Comment of Admiral Beatty after seeing 2200 of his sailors disintegrate. Idiot.
He was, of course, promoted, appointed First Sea Lord and granted an Earldom....
Attention Trina Solar Investors: China's Central Bank to Cut Rates (TSL)
7:01 a.m.
10:01 a.m. EDT: What to Look for As the Day Wears On
7:39 a.m.
Lehman Brothers to sell carbon credit portfolio: source (LEH)
Ever wonder why the big banks are pushing carbon trading? They have to do something to generate income. Those balance sheets aren't going to re-liquify themselves....7:55 a.m.
'AIG could be a much bigger problem than Lehman Brothers' (AIG; LEH)
9:14 a.m.
Breaking-- Governor Paterson Directs NY Insurance Superintendent Allow AIG Subsidiaries to Upstream $20 Bil. to Parent (AIG)
11:39 a.m.
Citi, BoNY, Aozora among largest Lehman creditors (BK; C)
1:24 p.m.
Fed Adds Most Reserves Since 9/11 Attacks as Banks Hoard Cash
The credit contraction we've seen and will see is massive. The credit card companies are already cutting limits, prime brokers are pulling in unused lines from hedge funds, upside down mortgages that have to be written off, it's in the Trillions, maybe tens of trillions. The Fed, the Treasury, the Bureau of Engraving can't reliquify as fast as we're contracting....1:48 p.m.
Hedge funds dealt another blow by Lehman failure (LEH)
1:57 p.m.
Goldman Loan or: Oh Canada? Manulife, Sun Life and Great-West possible buyers for AIG and Lehman assets (AIG; GS; GWO.TO; MFC; SLF)
2:37 p.m.
S&P cuts Washington Mutual credit rating to junk. And: Chase seen as a likely suitor (JPM; WM)
3:01 p.m.
Credit Contraction, Deleveraging and the Coming Interest Rate Cut
I'm going to get self-referential (reverential?) for a few paragraphs and then let you read one of the really smart market economists. This is important stuff for charting your course over the next weeks and months....7:28 p.m.
AIG Seeks Huge Loan As Stock Dives 61% (S&P Cuts by Three Notches)
7:32 p.m.
Wells Fargo takes Lehman Related Charge (LEH; WFC)
7:42
BOHICA*-Brace for the Tsunami: Fitch, S&P Downgrade AIG (Updated)
*BOHICA8:34 p.m.
Bend Over, Here It Comes Again
Washington Mutual, Wachovia: Are Your Bank Deposits Safe? Not Exactly (WB; WM)
When I first came to the market I met a man who watched the near failures of Goodbody and F.I. duPont, Glore, Forgan in the early '70's. This was about the time that the Securities Investor Protection Corp. was authorized. He told me that at first he assumed all would be well for retail investors. During the '73-'74 bear market he changed his mind and would only deal with the strongest firms.Sept 11
What changed his mind? He realized that if a firm were to fail, it would probably be during a period of financial distress. This is precisely the time you want maximum flexibility and although the guarantee was probably good, if there were any glitches in the liquidation or transfer of his account that HE would be the one bearing the risk. He decided to only do business with the soundest firms, even if it cost him extra fees or commissions. He summed it up by saying "You never want to call the firm and have the receptionist answer 'Hello, SIPC'''
In an August '07 post "Liquidity in Business and Markets" and repeated in a Jan. '08 post "I'm Pissed at Merrill and Citigroup" I touched on the story of the insolvency of Krupp, at the time the largest industrial concern in Germany:
'Liquidity is expensive but illiquidity is much more so, because it destroys the very existence of a firm"This has gotten to be a long introduction, on to the links....
I don't remember if it was Johannes or Ernst, it was a long time ago that I read Manchester, quoting one of the Schroeder boys on the insolvency of Krupp. That line has stuck with me. Here's the book.
Citi, Goldman Think There May be a Problem at Lehman, Cut from Buy to Hold (LEH)
