I think the bankers and insurance companies are asking for the moon. they have been living beyond their means and now they want government bailouts. Once they do this the gov. will be in their board rooms all the time. Let the markets go bust and start all over. Clean house and start again.

merle ayres, Humboldt, USA

Nick. The insurers have to either pay the difference between 100% and 8% or (b) pay 100% and receive 8%. Therefore the insurers cannot just buy the bonds at 8% they need to pay the insured the balance of the value. The big problem: The total insured is leveraged by "x" more than real debt LB issued.

CDS Wizard, London,

Its simple, in our monetary system there exists a money supply that is created completely by debt that must be paid, but the interest that is expected back on top of that debt just doesnt exist in the money supply so its like a game of musical chairs. The boom bust cycle is inevitable. Who gains?

Roger, London, UK

Yes Nicholas but why would you sell your bonds for 8.625 cent if you have them insured up to 100 cent?

This is going to destory a lot of the insurers

Robert, Limerick, Ireland

Stupid house buyers met stupid bankers, a marriage made in hell. Don't blame the bankers alone, blame human greed. Capitalism is the least bad form of government, because it guarantees freedoms and mostly works....mostly, I said.

Paul Freeman, London, England

Anil,

Agreed. A system which could hold those to account when they mess up would be a start.

Jeremy Poynton, Frome, United Kingdom

So, if I've understood this correctly:
The bonds were guaranteed by 350 banks and investors - who no doubt took a handsome commission for doing so - and now they don't know if they can pay?
Why was this allowed, what were the regulators doing?

AndyN, Reading,

So let's be clear about this.

We were told that 'we had to bail out Lehman's.'

Why? Because the private sector valued Lehman's lendings at 8.625 cents to the dollar.

Right, so the taxpayer funds 91.375%, huh?

No. Those who INSURED LEHMAN'S do that.

Financial experts?

Hmm......

Rhys Jaggar, Leeds, UK

"May you live in interesting times."
For further explanation, see http://en.wikipedia.org/wiki/May_you_live_in_interesting_times.

Bill, Ann Arbor, USA

So if the insurance pays the shortfall on lehman's debt will that make if a viable company again?

Or where will that money be distributed? Bet some goes on bonuses!

bill, cornwall,

There is something rotten in the current financial set up. Lehmans caused this economic crises and yet they will make millions each for going bust. I think our political leaders are thives and they are colluding with the bank robbers. It is time there is an independent investigation into all this.

roy, Stockport, UK

Capitalist believe you can get ahead, socialist believe you can break even, and mystics believe you can get out of the game. Ohmmmmmmmmm

Jim, Columbus , US

'Washington has grave concerns' re $700bn TARP!

Well there is a surprise. I have read that this will cost the USA a minimum of $4trillion. Of course this will strengthen the Dollar as it is a mere 35% of GDP!

We are all being lied to and we will all suffer badly. What an utter shambles.

MGrelton, Bath, UK

I agree with Chris of Ashford. I also think that we have been subjected to a fraud so massive, that all of the other shady dealings on this planet put together, since the dawn of time, pale into insignificance.

E J Murray, Kerry, Ireland.

Buy soup!

Chris, London,

There is a saying "capitalism is bad but communism is worse" We are all watching horrors of capitalism now.

At this time I really do not know which system is good for the ordinary citizens of the world?

anil Hirlekar, Pune, India

Proof beyond doubt ! None of the banks know or understand their own worth, let alone the value of anything else they touch. Time for a major clearout, but who will do it ? Bank chiefs hardly ever show their faces, and when they do - e.g. HBOS , their words/sentences do not make any sense !

John Fisher, Edinburgh,

I hope that all this is going to lead to some fraud charges.

Chris, Ashford, Middx, England

It will be interesting to watch which sectors of which economies are "allowed" to fail by their governments, and which will be "saved". Place your bets please...

Alex Hamilton, New York NY, USA

''An auction of Lehman’s bonds yesterday determined that the bank’s borrowings were worth only 8.625 cents on the dollar.''

So they cannot afford to make payment of 100% value of the bond,,yet they can actually buy the bond for 8.625 cents on the dollar.

Seems easy, buy the bonds at 8.625 cent

Nicholas Iles, Oswestry, Shropshire, United Kingdom