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Can you give us some perspective on the seismic shifts we've already seen in trading this week?

Lehman Brothers (NYSE: LEH), a firm dating back to before the Civil War is gone, bankrupt, kaput. Merrill Lynch (NYSE: MER) was pressured by the Fed to put it up for sale to Bank of America (NYSE: BAC), but was able to negotiate an extremely generous price of $29 a share, a huge premium from the $17.05 price they closed at on Friday.

While the strategic rationale for BAC to buy MER is pretty obvious - it weds the biggest retail bank to the biggest retail brokerage firm - what possessed BAC to pony up that sort of price is far from obvious. They could have had LEH for maybe $0.05 a share if they wanted it. If they had waited a week they could have probably picked up MER for $10 a share. I would not be shocked to find out that there was some sort of inducement from the government for them to step up the price, so there would be some "good news" for the markets today.

It also appears that the largest insurance company in the U.S. is now seeking federal protection?

Right - meanwhile, it appears that AIG (NYSE: AIG) turned down capital-raising offers from several private equity firms and is now going hat in hand to the Fed.

Apparently the rule of law means nothing on Wall Street now. There is nothing in the Federal Reserve Act that would allow a non-Depository financial institution that is not even a Primary Dealer (and even that is stretching it big-time - but was the basis the Fed was part of the Bear Stearns (BSC) bailout/shotgun wedding) to have access to the Fed window, and certainly not to the tune of $40 billion which is reportedly what they are looking for.

This is crazy. There is no Fed window anymore. A window implies that it is something that could be open and shut, so that access to it could be controlled. This is no window, it is a gaping hole in the side of the wall. To the extent it is still a window, it is like all the windows of the J.P. Morgan Tower in Houston.

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