Three brief items

1. Wow. Wall Street has had an exciting weekend.

Personally, I'm glad Lehman has bit the dust. Somebody had to. These firms and their proprietary traders are in the business of taking risks, and it is in the nature of risk that there be losers.

The "moral hazard" was becoming enormous, even in just the relatively short period since the government avoided a Bear Stearns bankruptcy with a fire sale of that storied brokerage firm to JP Morgan in the spring.

Neither well, nor poorly. JPM stock has lost about 7% of its value since that time. But this is in line with the general market trends in the intervening period, so the acquisition of Bear can't be blamed for that.

Anyway, there had been a lot of talk, the usual talk, about how Lehman again was somebody "too big to fail" and the Federal Reserve or the Treasury or somebody would have to step in and prevent its failure. But nobody has.

As I say, I'm glad. So everybody will be just a little more careful with risky financial instruments in the near future perhaps? So that might not be a terrible thing?

It is sometimes called "creative destruction." Something has to be destroyed as something else is created. What is now being created in the US is a depositor-centered financial world, in which commercial and investment banks are one and the commercial side is the one.

2. CSX opinion.

The second circuit has issued an opinion in the much-watched matter of TCI/CSX.

You can refresh your recollection of the issues here.

I'm disappointed. The 2d circuit didn't even get to what I see as the key issue in the case, the unbundling of votes from economic interest. Instead, it tersely upheld the vote that has been taken and the district court's decisison ONLY INSOFAR as the district court had refused to interfere with that vote.

"We decide that issue alone at this time," the appellate court said. Drats.

3. Crude oil likely to stabilize

Here's some guessing (note that word!).

The fall in the price of crude oil in recent weeks, from its peak of nearly $150 a barrel in mid-July to a current price below $100, has likely gone as far as it is going to go.

The crude oil price run-up this summer seems to have been a South Sea-like speculative mania, and the run-down seems to have been the bursting of that bubble, so now the stuff is back in the grip of the fundamentals.

Given the continuing credit/liquidity crunch, there will be a great deal of temptation to inflate the currency, at least until $110 doesn't mean as much as $90 does now.