South Korea’s top financial markets regulator on Monday said that state-run Korean Development Bank (KDB) should think carefully about buying a stake in Lehman Brothers given the state of international markets, in an indication that the government would not support a potential deal.
Tuesday:
Lehman's stock had plummeted 45 percent to its lowest price since the 1998 Asian debt crisis as investors worried the No. 4 investment bank was struggling to raise the capital it needs to offset losses on hard hit mortgage and other assets.Analysts estimate Lehman in its third-quarter results could write down the value of its assets by more than $4 billion.
Investors demonstrated the extent of their worries by bidding up the price of Lehman credit default swaps by 50 percent, fueled by news that takeover talks with Korean Development Bank had broken down.
Megan McArdle today:
Lehman just declared the largest loss in its 160 year history. Even analysts who had been expecting a big bath were shocked. The stock value nearly halved in trading this morning. (Side note: if you doubt insider trading takes place, look at what happened yesterday. Clearly a number of people got a hint of those numbers in advance.)
I learned about causality in, like, grade school, which maybe explains why I don't promiscuously throw around accusations of insider trading.
When does ignorance become a fireable offense?
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