What do you think?

All of America now can rest easy: Merrill Lynch chief John Thain won’t get his $10 million bonus after all, having succumbed to browbeating calls for fiscal restraint.

Upside: Maybe we can avoid another round of outrage from Congressmen and other whiners who are shocked—shocked!—that anyone on Wall Street could get paid so handsomely, much less actually deserve it.

Downside: Thain gets screwed out of what rightfully was his, for he did deserve a bonus, for myriad reasons. Same goes, arguably, for Morgan Stanley chief John Mack and the seven senior execs at Goldman Sachs, all of whom will forgo any year-end payout. Worse, this whole kerfuffle may embolden the self-righteous, sanctimonious mob that now decries wealth creation and the profit motive. Where were all these populist prudes when the stock market was rising 63% from 2003 through October 2007? Answer: They were fat and happy and counting their money.

It’s one thing when a greedy fatcat utterly fails his shareholders, guts his company and walks away with an undeserved windfall. Two lamentable examples: the $42 million parachute for Charles Prince, who flopped at integrating the smokestacks of Citigroup and let it plunge head-first into the subprime debacle; and the $160 million sendoff for Stanley O’Neal, accumulated over an entire career at Merrill Lynch before he looked the other way while his traders loaded up on wild-eyed risk.

John Thain, by contrast, was brought in only a year ago to fix the Merrill mess, and he worked 24/7 to do it. Troubled rivals Lehman Brothers and Bear Stearns dilly-dallied—rather than swallow their pride and sell themselves to healthier partners—and they went belly-up, pretty much. Thain, by contrast, handed Merrill cnbc_comboQuoteMove(‘popup_mer_ID0ENIAC15839609′);
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over to Bank of America cnbc_comboQuoteMove(‘popup_bac_ID0EONAC15839609′); Since mid-September, just before that deal popped, the stock price of Citigroup
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is down 43% and Goldman cnbc_comboQuoteMove(‘popup_gs_ID0ERHAE15839609′); is down 46%—but Merrill shares are up 5%.

That’s a gain of more than $1 billion in market cap for that floundering firm, so a $10 million bonus barely is a rounding error. Ten million bucks, in fact, is equivalent to how much revenue Merrill collects in just 20 minutes, based on a 40-hour work-week.

Yet now we’re gonna take pleasure in stiffing John Thain? Sounds a little punitive to me.

This CEO backlash, moreover, could spread far beyond Wall Street to infect the entire U.S. economy. Yet, last year, median pay rose only 1.3% and bonuses fell by 5% for the CEOs of more than 230 multibillion-dollar companies, even as their stock prices rose an average of 7.5%, says the research firm Equilar. At financial giants the median pay package fell 20% in 2007, and Wall Street now braces for haircuts of 40% to 70%.

Yet now we’re gonna take pleasure in stiffing John Thain? Sounds a little punitive to me. This CEO backlash, moreover, could spread far beyond Wall Street to infect the entire U.S. economy. Yet, last year, median pay rose only 1.3% and bonuses fell by 5% for the CEOs of more than 230 multibillion-dollar companies, even as their stock prices rose an average of 7.5%, says the research firm Equilar. At financial giants the median pay package fell 20% in 2007, and Wall Street now braces for haircuts of 40% to 70%

Okay, so some CEO pay is way out of whack, and too often mediocre performance is rewarded richly. In the late 1970s the bigwigs earned an average of 30 times the rank-and-file worker’s paycheck, and by this decade the gap widened past 300x. But this owes mainly to the fixes put in place a decade ago, in an earlier crusade to reduce CEO pay. Comp critics wanted to tie CEO pay more closely to a company’s stock performance, so stock options came into vogue and, in the long bull run that followed, the rich got vastly richer.

But trying, yet again, to ensure a corporate chieftain doesn’t earn “too much” money is a matter best left to boards and shareholders—not to politicians and union demogogues and irate day traders. (My favorite new tack: clawbacks.) Alas, I don’t hear anyone suggesting we cut the pay of other culprits in this crisis: Barney Frank and other lawmakers for inflating the Fannie-Freddie housing bubble; Securities and Exchange Commission chief Christopher Cox for letting risk run amok; and tens of thousands of people who lied about their finances to land super-cheap loans to buy more house than they could afford.

Oh no, that would be wrong—let’s take it out on the CEOs. It’s more fun that way.

i love blackberry, but not sure about this one, will be testing it out shortly

AP Blackberry Storm

Today should be a momentous day forResearch in Motion and Verizon as the two unleash the new BlackBerry Storm on the market. It’s a slick, touch screen BlackBerry that could offer Apple’s iPhone its first real competition. We’ve been playing with the device for much of the week and think some of the hype might be a little overdone.

This isn’t an entirely technical review, since those of you who understand the software, pixel count and various apps have gotten your information before now. This is a far more consumer-oriented look at the device and whether you might want clip the Storm to your belt.

First, some background: I’m a CrackBerry. Addicted. I check and re-check for new emails. Feel compelled to respond to everyone. I text, I snap photos. I’ve shot video. When I’m out in the field, working out of a satellite truck, I write my scripts on this thing. I surf the web. I usually write my blogs on it as well, though I’m using my desktop this morning. When I’m at an Apple event, I live blog via the BlackBerry as well. I like it, a lot.

I tried to make the switch to Apple’s iPhone. I love the concept. I love the screen; the multi-media concept; the flexibility of the device. And most recently, I really liked 3G access. But after trying and trying and trying, I just couldn’t get used to the touch screen interface. My mind and fingers couldn’t mesh and I kept losing my place on the screen. It was a deal-breaker. I wanted to love the iPhone so much. But I’m touch screen challenged and just can’t get there.

BlackBerrys past gave me the keypad I needed, but the screen was substandard. The net surfing was substandard. When I saw the Bold ($299 retail with two year agreement), it was love at first sight. A spectacular screen, 3G, a completely different web-surfing experience, a little video camera, incremental but nice tweaks to the operating system and graphics. For me, it was a huge leap forward from the Curve I had been using. It’s yummy.

So enter the BlackBerry Storm ($199 with two year agreement), hyped as an iPhone killer, and the bridge device everyone was waiting for; combining the touch-screen advantages of iPhone, but with a unique tactile feedback system that would appeal to those of us who have that whole finger-mind-touch-screen issue. All of us in the Silicon Valley Bureau have spent some time playing with Storm, and we all have strong feelings about it since we’re all BlackBerry users. As mentioned, I’ve been using the Bold; producer Annie Pong has migrated to the Storm; and editor John Chiala has been using the BlackBerry 8800.

Annie found the Storm very “hesitant” when she typed. There was a “lag time” between hitting the keys and seeing the letter or number appear on screen. That’s something that can be adjusted, but it never quite seemed to work well enough for her. She also noted that when you swing the device around to change the screen to a “landscape” appearance, when you turn the device from a vertical to horizontal field, there was a delay and that seemed kind of strange.

John also found that the Storm wasn’t intuitive enough. “Seemed like there was lot of times you had to tap two or three times to get it to do what you wanted to do.” He added that, “At first glance, I wasn’t real thrilled with it. Looks cool though. Video and graphics look awesome.”

Another knock: the tactile response constantly made me feel like the thing was going to fall apart. When you touch the screen, the thing you’re touching is highlighted. Then you have to click the entire screen glass to launch whatever it is you just touched. But when the whole screen moves, it feels like the glass is going to fall out.

Storm’s biggest positive may also showcase its biggest drawback: The screen is gorgeous. There’s something amazingly simple about buying an iPod or iPhone and instantly being able to connect to one of the easiest, broadest, most robust online media stores available. And with the Apple App Store, you can constantly upgrade and add new programs. In other words, if you aren’t touch screen averse, and you’re trying to decide between BlackBerry Storm and Apple’s iPhone—and your company supports iPhone (mine doesn’t yet)—I don’t see why you wouldn’t choose iPhone just because of iTunes.

For me, I’m extremely happy with my Bold and my iPod Touch. The fact is, watching video or listening to music on my phone is nice in theory, but it eats up a lot of juice. And not being able to communicate with my communication device because messing around with all my extra-curricular activities ate up all my battery life just doesn’t work for me. Until iPhone, and Storm for that matter, dramatically improve battery life, I’m happy to carry two devices. One for communication and occasional entertainment, and one for entertainment only.

The Storm will sell well because it’s tough to break the BlackBerry addiction, it’s fun to play with, it looks so cool, and there’s a huge amount of buzz around it. iPhone challenger? Maybe. iPhone killer? Hardly.

BLACKBERRY BOLD GETS OFFICIAL RELEASE DATE

This is it! This is the news we’ve been waiting for since May. On Wednesday, Research In Motion announced that the long-awaited RIM BlackBerry Bold will finally be available starting November 4 at AT&T for $299.99 with a two-year contract and after a mail-in rebate.

Though the smartphone was originally slated for a summer release, as we all painfully know, the Bold was delayed time and time again. Part of it was the lengthy carrier certification process and most recently, RIM said it held off on the release to make sure the 3G experience would be the best at launch (after witnessing the iPhone 3G debacle). Hey, whatever the story, we’re just glad to know we can finally get our hands on this sucker in a couple of weeks.

So despite all the delays and with new devices already on the market, are you going to get one?

GOOGLE SWAMPED WITH ‘GREAT IDEA’ SUBMISSIONS

A $10 million call by Google Inc. for beneficial, world-changing ideas has generated more than 150,000 online submissions.

The deadline for people to submit ideas for the initiative, called Project 10^100, was Monday. Google employees will now sift through the ideas, submitted in 25 languages, and choose 100 semifinalists by January 27. Funding for up to five winning ideas will be awarded in May.

“We’re thrilled by the large array of enthusiastic responses to Project 10^100. That number has exceeded our expectations,” said Bethany Poole, a product marketing manager at Google.

“We’re also very impressed by the variety and ingenuity of the submissions across all categories, ranging from health to energy, education and the environment,” she said.

Google launched the ambitious project September 24 to help celebrate its 10th birthday. In announcing Project 10^100 (pronounced “10 to the 100th”), the Internet giant said to hoped to solicit and bankroll fresh ideas it believes will have broad and beneficial effects on people’s lives.

The project’s Web site suggested that successful ideas address such critical issues as providing food and shelter, building communities, improving health, granting more access to education, sustaining the global ecosystem and promoting clean energy.

As an example, Google cited the invention of the Hippo Water Roller, a barrel-shaped container that holds 24 gallons and can be rolled with little effort like a wheelbarrow, making it easier for African villagers on foot to transport critically needed fresh water to their homes.

Over the past month, the Google project’s Web site received more than 2.5 million unique visitors, and its video was watched more than a million times. Entrants had to briefly describe their idea and answer six questions, including, “If your idea were to become a reality, who would benefit the most and how?”

Now comes the hard part. More than 3,000 Google employees from more than 50 offices worldwide, with the help of an advisory board, will whittle down the massive list to 100 finalists.

“We will be going through the database and judging the ideas based on their reach, depth, attainability, efficiency and longevity,” Poole said.

On January 27, Google will make the top 100 ideas available online for public voting for one week. A panel of as-yet-unnamed judges will then review the top 20 ideas and announce up to five winners in mid-February.

Funding, from a pool of $10 million, will be awarded in May. If the judges decide to reward five winning ideas, each will receive $2 million. If only two ideas are chosen, each will receive $5 million, and so on.

Nothing to add, just listen

Kanye West

http://www.zshare.net/audio/2061601598dc2cb1/

Eminem

http://www.zshare.net/audio/20617146f1166a42/

I am suprised i haven’t heard about this before, just discovered it while watching an episode of CSI Miami.

The Future continues to Arrive

Remember when you were promised all those amazing future tech innovations? Just around the corner was supposed to be a shining technology utopia with flying cars, personal space travel to distant galaxies, and bio-implantable cell phones. It’s almost disappointing enough to make you sit at home and watch old episodes of “Space 1999″.

Don’t lose hope! An amazing glimpse of this promised future has just arrived at ThinkGeek in the form of the Bluetooth Laser Virtual Keyboard. This tiny device laser-projects a keyboard on any flat surface… you can then type away accompanied by simulated key click sounds. It really is true future magic at its best. You’ll be turning heads the moment you pull this baby from your pocket and use it to compose an e-mail on your bluetooth enabled PDA or Cell Phone. With 63 keys and and full size QWERTY layout the Laser Virtual Keyboard can approach typing speeds of a standard keyboard… in a size a little larger than a matchbook.

This is a good question?? It agrees with my personal belief that price of oil is influenced by so many factors, its hard and unwise to attribute it to 1 particular factor, spikes may occur as with everything, but you cannot predict it, the only ones with good foresight work for the oil companies and the only foresight they need is demand will always be there( because of the people, and will see if the green thing will change this) so whatever the price is they will make money.  

“It all seems so quaint and distant now, that debate about the cause of sharply rising oil prices during the first half of this year. When homes and jobs and the whole damn economy seems at stake, the pump has stopped, at least in the media’s focus, appearing to be such a threatening object.

And looky here: while most of us have had our attention elsewhere, on pigs and lipstick and Bill Ayers, the price of oil has plummeted from its earlier mid-year high. Just the psychological effect of all those “Drill, baby, drill” chants must have forced it down.
Or it could be that a weakening economy produced falling demand. Or even that, just as the price rose in close coordination with a drop in the value of the dollar, the price has fallen as the dollar has regained value (since world oil transactions are valued in dollars).

But that would mean that all the nostrums for changing the equation on the production side–measures that would, most experts agree, take years to have any effect, have far less power to change oil prices quickly than reduction in demand for gasoline and other petroleum products. And that would mean conservation, far from being, as Dick Cheney once ridiculed it, just “a sign of personal virtue,” would be the most immediately effective way of dealing with — what’s that cliche again? — pain at the pump.”

Nice song, a bit slow tempo, but i liked the production on it

I am still trying to understand it, this is like a natural disaster, hard and fast with apparently no one seeing it come. Everyone is scrambling and worrying; government, companies and people (even rappers are rapping recessions, and these guy never seem affected on a national scale). No one is really good as far as I know. I am pretty sure some people saw this coming, I think a lot of people saw it coming but when their is a lot of money to be made and no end in sight, people just keep going.Right now WHOSE FAULT IS THIS? (I don’t really but the government and American people love to find the villain almost as much as the solution to the problem

A policeman tries to calm and direct customers crowding the entrance of a branch of Hong Kong

Two weeks ago, Wall Street titans and the government’s most powerful economic stewards made a fateful choice: Rather than propping up another failing financial institution, they let 158-year-old Lehman Brothers Holdings Inc. collapse.

Now, the consequences of that decision look more dire than almost anyone imagined.

Lehman’s bankruptcy filing in the early hours of Monday, Sept. 15, sparked a chain reaction that sent credit markets into disarray. It accelerated the downward spiral of giant U.S. insurer American International Group Inc. and precipitated losses for everyone from Norwegian pensioners to investors in the Reserve Primary Fund, a U.S. money-market mutual fund that was supposed to be as safe as cash. Within days, the chaos enveloped even Wall Street pillars Goldman Sachs Group Inc. and Morgan Stanley. Alarmed U.S. officials rushed to unveil a more systemic solution to the crisis, leading to Sunday’s agreement with congressional leaders on a $700 billion financial-markets bailout plan.

The genesis and aftermath of Lehman’s downfall illustrate the difficult position policy makers are in as they grapple with a deepening financial crisis. They don’t want to be seen as too willing to step in and save financial institutions that got into trouble by taking big risks. But in an age where markets, banks and investors are linked through a web of complex and opaque financial relationships, the pain of letting a large institution go has proved almost overwhelming.

In hindsight, some critics say the systemic crisis that has emerged since the Lehman collapse could have been avoided if the government had stepped in. Before Lehman, federal officials had dealt with a series of financial brushfires in a way designed to keep troubled institutions such as Fannie Mae, Freddie Mac and Bear Stearns Cos. in business. Judging them as too big to fail, officials committed billions of taxpayer dollars to prop them up. Not so Lehman.

“I don’t understand why they didn’t understand that the markets would be completely spooked by this failure,” says Richard Portes, professor of economics at London Business School and president of the Centre for Economic Policy Research. Rather than showing the government’s resolve, he says, letting Lehman fail only exacerbated the central problem that has afflicted markets since the financial crisis began more than a year ago: Nobody knows which financial firms will be able to make good on their debts.

To be sure, Lehman’s downfall was largely of its own making. The firm bet heavily on investments in overheated real-estate markets, used large amounts of borrowed money to supercharge its returns, then was slower than others to recognize its losses and raise capital when its bets went wrong. The depth of the firm’s woes made finding a willing buyer a difficult task, leaving officials with few viable options.

Given the limited time and information available, many experts believe government officials made the best choices possible.

Struggle for Capital

As they watched Lehman struggle to raise capital, policy makers — including Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and New York Fed President Timothy Geithner — mulled the question of whether they could let Lehman fail. On the one hand, they didn’t want to come to the rescue because they were concerned about moral hazard, the idea that bailouts encourage irresponsible risk-taking, according to people familiar with the planning. They doubted Lehman had viable buyers and they thought the market and the Fed had had time to prepare to handle the fallout if a big institution collapsed. Still, some Fed officials were leery of sending signals that the Fed was done working with Wall Street to stop the spreading crisis. Mr. Geithner, for one, had been telling others that the markets were still in for serious trouble.

“If you don’t do something, the outcome is going to be bad,” Mr. Geithner told executives as they gathered to bargain over Lehman’s fate at the New York Fed’s downtown headquarters on Friday night, Sept. 12, according to a person in the meeting.

At one point, officials raised with Wall Street bankers the possibility of a private-sector rescue fund, but the bankers either balked at the idea of bailing out a competitor or didn’t have the extra funds needed, people familiar with the situation said.

Prepare the Markets

Over the weekend, as possible buyouts by Bank of America Corp. and U.K. bank Barclays PLC fell through, Fed officials focused on what needed to be done to prepare markets for what would be the largest bankruptcy in U.S. history. Lehman’s total assets of more than $630 billion dwarf WorldCom’s assets when the telecom company filed for bankruptcy in 2002 with assets of $104 billion.

Officials were particularly concerned with two areas: the credit-default-swap market, where players buy and sell insurance against defaults on corporate and other bonds; and the so-called repo market, where Wall Street banks fund their investments by putting up securities as collateral for short-term loans.

The Fed had been pushing Wall Street firms for months to set up a new clearinghouse for credit-default swaps. The idea was to provide a more orderly settlement of trades in this opaque, diffuse market with a staggering $55 trillion in notional value, and, among other things, make the market less vulnerable if a major dealer failed. But that hadn’t gotten off the ground. As a result, nobody knew exactly which firms had made trades with Lehman and for what amounts. On Monday, those trades would be stuck in limbo. In a last-ditch effort to ease the problem, New York Fed staff worked with Lehman officials and the firm’s major trading partners to figure out which firms were on opposite sides of trades with Lehman and cancel them out. If, for example, two of Lehman’s trading partners had made opposite bets on the debt of General Motors Corp., they could cancel their trades with Lehman and face each other directly instead.

The Fed had also seen with the collapse of Bear Stearns how the repo market was prone to severe disruptions when lenders got skittish, a problem that threatened to cut off crucial funding to Wall Street banks. Because repo loans are made for periods of as little as a day, the funding can disappear suddenly — one reason the Fed set up an emergency facility to lend to securities firms in the wake of Bear Stearns’s collapse. Fed officials worked furiously through Sunday to expand that facility, allowing banks to put up as collateral for loans a wider range of securities, including stocks.

On Sunday, after the Barclays deal fell through, the group began to “spray foam on the runway” — the term Mr. Geithner used to describe measures to cushion the blow. By that night, Fed officials recognized that their preparations might not cover all contingencies. Still, they expected the turbulence to settle down after a time, with the help of the expanded lending facilities they hurried Sunday to put in place. They also felt that financial institutions and markets had been given enough time to prepare for the shock of a large failure since the crisis consumed Bear Stearns in March.

But Lehman’s bankruptcy, filed early Monday morning in federal bankruptcy court — case No. 08-13555 — proved far more destabilizing, and spread much further, than many had expected. The bankruptcy immediately wiped out huge investments for Lehman shareholders and bondholders. Among the biggest was Norway’s government pension fund, which invests the country’s surplus oil revenue. As of the end of 2007, the most recent data available, the fund owned more than $800 million worth of Lehman bonds and stock. Lehman’s demise has become a lightning rod for critics who have long questioned the way the government was investing the oil resources. A spokesman said the fund’s management is “very concerned and monitoring the situation closely.”

The government’s decision to let Lehman go marked a turning point in the way investors assess risk. When the Fed stepped in to engineer the takeover of Bear Stearns by J.P. Morgan Chase & Co. in March, Bear’s shareholders lost most of their investments, but bondholders came out well. In the financial hierarchy of risk, this wasn’t surprising, since bondholders have more contractual rights to get their money back than equity holders. But it created a false impression among investors that the government would step in to rescue bondholders when the next bank ran into trouble. By letting Lehman fail, the government had suddenly disabused the market of that notion.

The reaction was most evident in the massive credit-default-swap market, where the cost of insurance against bond defaults shot up Monday in its largest one-day rise ever. In the U.S., the average cost of five-year insurance on $10 million in debt rose to $194,000 from $152,000 Friday, according to the Markit CDX index.

When the cost of default insurance rises, that generates losses for sellers of insurance, such as banks, hedge funds and insurance companies. At the same time, those sellers must put up extra cash as collateral to guarantee they will be able to make good on their obligations. On Monday alone, sellers of insurance had to find some $140 billion to make such margin calls, estimates asset-management firm Bridgewater Associates. As investors scrambled to get the cash, they were forced to sell whatever they could — a liquidation that hit financial markets around the world.

Cash Calls

The cash calls added to the problems of AIG, which was already teetering toward collapse as it sought to meet more than $14 billion in added collateral payments triggered by a downgrade in its credit rating. AIG was one of the biggest sellers in the default insurance market, with contracts outstanding on more than $400 billion in bonds.

To make matters worse, actual trading in the CDS market declined to a trickle as players tried to assess how much of their money was tied up in Lehman. The bankruptcy meant that many hedge funds and banks that were on the profitable side of a trade with Lehman were now out of luck because they couldn’t collect their money. Also, clients of Lehman’s prime brokerage, which provides lending and trading services to hedge funds, would have to try to retrieve their money or their securities through the courts.

Autonomy Capital Research, a London-based hedge fund that was started in 2003 by former Lehman trader Robert Charles Gibbins, was among the Lehman clients who got caught. When Lehman filed for bankruptcy protection, it froze about $60 million of Autonomy’s funds, according to a person close to the situation. That is about 2% of the $2.5 billion Autonomy manages. An official at Autonomy declined to comment.

Spooked that other securities firms could fail, hedge funds rushed to buy default insurance on the firms with which they did business. But sellers were hesitant, prompting something akin to what happens if every homeowner in a neighborhood tries to buy homeowners insurance at exactly the same time. The moves dramatically drove up the cost of insurance on Morgan Stanley and Goldman Sachs debt in what became a dangerous spiral of fear about those firms.

At the same time, hedge funds began pulling their money out of the two firms. Over the next few days, for example, Morgan Stanley would lose about 10% of the assets in its prime-brokerage business.

“It was just mayhem,” says Thomas Priore, the CEO of New York-based hedge fund Institutional Credit Partners LLC. “People were paralyzed by fear of what could erupt.”

Amid the uncertainty about how Lehman’s bankruptcy would affect other financial institutions, rumors and confusion sparked wild swings in stock prices. On Tuesday, for example, a London-based analyst issued a report saying that Swiss banking giant UBS AG, already hurt by tens of billions of dollars in write-downs, might lose another $4 billion because of its exposure to Lehman. Shares in UBS fell 17% on the day. UBS subsequently said its exposure was no more than $300 million.

Rising concerns about the health of financial institutions quickly spread to the markets on which banks depend to borrow money. At around 7 a.m. Tuesday in New York, the market got its first jolt of how bad the day was going to be: In London, the British Bankers’ Association reported a huge rise in the London interbank offered rate, a benchmark that is supposed to reflect banks’ borrowing costs. In its sharpest spike ever, overnight dollar Libor had risen to 6.44% from 3.11%. But even at those rates, banks were balking at lending to one another.

Within a few hours, the markets had shifted their focus to the fate of Goldman Sachs and Morgan Stanley, which found themselves fighting to restore investors’ flagging confidence. During an earnings presentation in which he answered one after another question about the firm’s ability to borrow money, Goldman chief financial officer David Viniar made an admission: “We certainly did not anticipate exactly what happened to Lehman,” he said.

Morgan Stanley’s stock, meanwhile, plunged 28% in early trading as investors bet that it would be the next after Lehman to fall. At around 4 p.m., the firm decided to report its third-quarter earnings a day early, in the hope that the decent results would halt the stock decline.

“I care that it could be contagion,” Morgan Stanley chief financial officer Colm Kelleher said in a conference call with analysts. “You’ve got fear in the market.”

Even as Morgan Stanley’s call was taking place, the Lehman fallout cropped up in a different corner of finance: so-called money-market funds, widely seen as a safe alternative to bank deposits. Many of the funds had bought IOUs, known as commercial paper, which Lehman issued to borrow money for short periods. Now, though, the paper was worth only 20 cents on the dollar.

At around 5 p.m. New York time, a well-known money-market fund manager called The Reserve said that its main fund, the Reserve Primary Fund, owned Lehman debt with a face value of $785 million. The result, said The Reserve, which had criticized its rivals for taking on too much risk in the commercial-paper market, was that its net asset value had fallen below $1 a share — the first time a money-market fund had “broken the buck” in 14 years.

The trouble in the commercial-paper market presented a particularly serious threat to the broader economy. Companies all over the world depend on commercial paper for short-term borrowings, which they use for everything from paying salaries to buying raw materials. But as jittery money-market funds pulled out, the market all but froze.

On Wednesday, the freeze in lending markets triggered a dramatic turn of events in the U.K. Amid growing concerns about its heavy dependence on markets to fund its business, HBOS PLC, the UK’s biggest mortgage lender, saw it share price plummet by 19%. The situation was a red flag for government officials, who suffered embarrassment earlier this year when they were forced to nationalize troubled mortgage lender Northern Rock PLC, which had become the target of the country’s first bank run in more than a century.

Moving quickly, the government brokered an emergency sale of HBOS to U.K. bank Lloyds TSB Group PLC. In a sign of their desperation to make the deal happen, officials went so far as to amend the U.K.’s antitrust rules, which could have prevented the merger. Together, HBOS and Lloyds control nearly a third of the U.K. mortgage market.

Back in New York, the situation at Morgan Stanley and Goldman Sachs was worsening rapidly. In the middle of the trading day, at about 2 p.m., Morgan Stanley CEO John Mack dispatched an email to employees: “What’s happening out here? It’s very clear to me — we’re in the midst of a market controlled by fear and rumors.” By the end of Wednesday, employees at Morgan Stanley and Goldman were shell-shocked. Morgan Stanley’s shares had fallen 24% to $21.75 while Goldman, the largest investment bank by market value, fell 14% to $114.50.

By Thursday, Messrs. Paulson and Bernanke decided that the fallout presented too great a threat to the financial system and the economy. In the biggest government intervention in financial markets since the 1930s, they extended federal insurance to some $3.4 trillion in money-market funds and proposed a $700 billion plan to take bad assets off the balance sheets of banks.

Three days later, Goldman Sachs and Morgan Stanley applied to the Fed to become commercial banks — a historic move that ended the tradition of lightly regulated Wall Street securities firms that take big risks in the pursuit of equally big returns.

To some, the government’s decision to resort to a bailout represents a tacit admission: For all officials’ desire to allow markets to punish the risk-taking that engendered the crisis, banks have the upper hand. “Lehman demonstrated that it’s much harder than we thought to deal effectively with banks’ misbehavior,” says Charles Wyplosz, an economics professor at the Graduate Institute in Geneva. “You have to look the devil in the eyes and the eyes are pretty frightening.”

I like her she seems talented and david banner whose talent seems…..

Lupe Fiasco stays cool  and brought along cooler people in Pharrel and Qtip for the ride, Sarah Green  is really good, just its hard to stand out as a singer sometimes but she rocks. I do want to go to Paris and Tokyo some day