...to have educated myself to the degree necessary to be prepared for the coming events. We are truly living in historical times. This from Jim Sinclair. Best of luck to all.

Late Breaking News: Wall Street on the Brink Author: Jim Sinclair

Dear Friends:

Unless a buyer or Fed bailout appears out of the blue, the great name of Lehman Brothers may well enter bankruptcy at 11:59 tonight. This will trigger a major test of the Credit Default OTC Derivatives. The investment banking firms are going down in flames as a product of those demonic OTC derivatives.

THIS IS IT AND IT IS NOW. HAVE YOU PROTECTed YOURSELF? IF NOT, WHY NOT? THE CURRENCY OF FINAL RESORT IS GOLD, MOST CERTAINLY NOT THE US$.

Derivatives market trades on Sunday to cut Lehman risk Sun Sep 14, 7:47 PM ET
Reuters
Sunday September 14, 9:52 pm ET

NEW YORK (Reuters) - Major players in the $455 trillion global derivatives market rushed Sunday to scale back exposure to a potential bankruptcy filing by investment bank Lehman Brothers in a rare emergency trading session.

Trading took place as U.S. regulators and bankers were making last-ditch efforts to prevent toxic assets from ailing Lehman Brothers (NYSE:LEH - News) spilling into global markets and rupturing investor faith in the international financial system. For details see (ID:nN14440361)

"This is an extremely, and I stress extremely, rare event. It also speaks to the more general notion that, in today's highly disrupted financial markets, the unthinkable is thinkable," said Mohamed El-Erian, the chief executive of Pimco, the world's biggest bond fund, based in Newport Beach, California.

The session opened at 2 p.m. New York time and was due to run until 4 p.m. (1800 to 2000 GMT), according to the International Swaps and Derivatives Association. ISDA later extended it for another two hours and some banks continued to offset their Lehman exposure even after the official session ended, according to a market source.

Trading involved credit, equity, rates, foreign exchange and commodity derivatives. ISDA estimates the OTC derivatives market excluding commodities has a value of $455 trillion.

Market sources said the special session was initiated by the Federal Reserve.

The aim is to reduce risk associated with a potential bankruptcy filing by Lehman Brothers Holdings Inc.

"Trades are contingent on a bankruptcy filing at or before 11:59 p.m. New York time Sunday (0359 GMT)," said the statement. "If there is no filing, the trades cease to exist."

LEHMAN DEAL HOPES FADE

Britain's Barclays Plc (LSE:BARC.L - News), which had appeared to be the frontrunner to take over Lehman -- excluding its bad mortgage-related assets -- pulled out of the bidding early in the afternoon, according to a person familiar with the matter.

Bank of America, the other party named as a potential acquirer, also turned away and had instead hammered out an agreement to buy Merrill Lynch & Co Inc (NYSE:MER - News) for roughly $29 a share, or $44 billion by Sunday evening, the Wall Street Journal reported.

Merrill Chief Executive John Thain and Bank of America (NYSE:BAC - News) Chief Executive Kenneth Lewis were present at weekend talks on the future of Lehman.

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