The market took another hit today. Some portfolios are going to be wiped out soon, followed by a few more financial institutions. If you want to know what's happening, take a look at this from Brad De Long's blog:
But the biggest and most obvious risk of all is the one associated with Lehman's own debt, which is now trading at less than 35 cents on the dollar ... [it] means an unknowably huge loss for anybody who wrote credit protection on Lehman Brothers at any point over the past five years. Those sellers of credit protection are staring down the barrel of billions of dollars in claims, and they're going to have to raise that money quick by selling anything they can get their hands on—and that might well include stocks.In a few words, whoever Lehman Brothers paid money to provide insurance for their debt instruments (see CDS post below) is going to have come up with the cash, and fast.
My Prediction: Unless more bailouts, or government orchestrated reorganizations occur, look for the stock market to continue its free fall through the end of the week.