I was surprised in watching Kudlow last night that the majority of his guests were AGAINST using any federal money to support the disposal of Lehman. Some even went so far as to say that this is the time when the government needs to draw the line in the sand, and see if our financial system can stand up to this type of a collapse.

Below is the current reporting from the AP, again the rhetoric is leaning against a bailout.

I am not convinced.

I have seen this page from the playbook over and over and over again over the last year, an imminent collapse and then a miracle save before the opening on Monday morning from the Fed. Whether it's guaranteeing the debt, an emergency rate cut, throwing out mark-to-market accouting rules, authorizing special "loan" facilities, or something so crazy I can't even think of it yet, I'm willing to bet right now that once we dig behind the headlines on Monday morning, we are going to find a heavy use of inflationary bailout measures to get this done.

Anyone agree? Seeing as how gold has been selling off illogically despite the inflationary nationalization of FNM/FRE, if they did just let Lehman collapse, gold would probably rally, reversing this trend.

CNBC knows something major is up. They already announced a special at 8PM Sunday night to discuss the Lehman situation. Something really fishy is about to happen.

-Hysteria

------------------------------------...

From the AP: "In March, the government helped engineer Bear Stearns' sale to JPMorgan Chase & Co. with a deal backed by a $29 billion loan from the Federal Reserve .

The difference this time is the government is not likely to provide any financial backing.

Paulson is against any use of government money in whatever deal comes together for Lehman, a person close to his thinking said Friday.

Unlike Bear Stearns, which happened swiftly and with little warning, financial markets have been aware of Lehman's troubles for a long time and have had time to prepare.

The government may also be less willing to bail out Lehman because the firm has been able to borrow money directly from the Fed through a program the central bank began after Bear Stearns imploded.

Finally, the government might not want to give investors the impression that it is the financial savior of troubled banks, analysts said. Instead, the feeling in Washington is that financial institutions will live or die by the free market."