And Tonight, It Begins…

Lehman may face failure, Merrill may be bought

(The perpetrator is being described as a tall, well-groomed business man last seen making off with the wealth of the middle class.)

What would happen if the U.S. government spent all of its “cash reserves” on nationalizing moral-hazard behemoths Fannie Mae and Freddie Mac and didn’t have anything left to bail out one of the world’s oldest and most venerable banks?

What would happen if another old and venerable banking institution was also on the brink of collapse and needed help just as urgently?

And let’s not even begin to wonder what would happen if the FDIC was planning on tapping those same cash reserves because it too is actually completely insolvent and now is left with no federal backstop.