Jon Markman, over at MSN Money, notes that "due to rules that penalize broker-dealers more than normal companies, it (Lehman) has no hope of simply reorganizing, canceling its debts and returning to the field of play."

Adding to that, he notes that "it (Lehman) must now liquidate all of its holdings to pay creditors, and that will result in the dumping of hundreds of billions of dollars worth of real estate, Treasuries and stocks into an already frozen market. No one knows all the totals, but Lehman is believed to have a Treasuries book worth $1 trillion all by itself."

Markman believes that hedge funds that Lehman owed money to and who in turn owed money to someone else, will have to liquidate anything that isn't nailed down to meet margin calls. Yeah, like we haven't heard that before. He doesn't mention precious metals or commodities for some reason, though I imagine a number of funds still may have to cough up PMs and/or their stocks that they have or have left in the hopes of surviving. Could be part of the reason, if we head south from here.

http://blogs.moneycentral.msn.com/to...