September 14, 2008
"Not Sure What Financial Companies [Lehman, e.g.] Are Worth"
The title is a quote from today's New York Times. How can this be when the companies are publicly traded and liquid and deep stock and debt markets? The government, that's how. By dabbling in the financial markets the government has uncoupled companies stock and debt price from fundamentals. How could you price Lehman shares and debt when you do not know what the government will do to bail out the company. Private money stays on the sidelines and waits for the government to commit. So the chief government financial officials are huddling around the clock to figure out what to do with Lehman. Intervention begets intervention; It's not good folks.
September 14, 2008 | Permalink
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