It's clear that the debates we've been having about the credit issues around ETNs are rapidly becoming a theory-meets-reality situation.

With ETN issuer (and note writer) Lehman Brothers now ... gone, the issue of default for ETNs is getting a very quick toss into the fire as Matt mentions in his blog and Murray details in his feature on the Opta ETNs. And the Lehman bond indices, THE bond indexes, are up for bid in a fire sale?

It's getting TOUGH to keep on top of all of this stuff, but Murray, Heather and Eric are all working on it. Can you tell Paul mailed in his feature from vacation? Paul, who's been ALL ABOUT ETNs and credit risk, has an incongruous Shari'ah ETFs feature posted to the site. Pretty funny.

And you know what else is funny (well, that may not be the word)?  Our own Heather Bell was WORKING at Lehman just a year ago. Nice timing, Heather. You're like one of those people who missed their flight that crashed & are interviewed on TV. "We forgot our passport, and got caught in some traffic and JUST missed the deadline at the counter ..."

MUCH funnier is the email I got THIS MORNING from Institutional Investor. Are you serious? Here is the email:

Lehman Is Tops In Fixed Income
Adding 12 team positions in High Yield sectors, Lehman Brothers finishes with 47, 11 more than second-place JPMorgan, to lead the All-America Fixed-Income Research Team for a ninth straight year.

Release Schedule
Day 1 Wednesday, September 10, 2008 - Structured Securities
Day 2 Thursday, September 11, 2008 - Strategy & Economics
Day 3 Friday, September 12, 2008 - Investment Grade
Day 4 Monday, September 15, 2008 - Emerging Markets
Day 5 Tuesday, September 16, 2008 - High Yield

I'm leaving the link in there, just to prove that the email was real.

Apparently, crazy markets make for humorous situations generally, because I saw the following ad on the Wall Street Journal last night. Right next to an article talking about the bailout of AIG was an ad from iPath promoting four AIG-linked ETNs. They must have set it up for keyword AIG ... and yesterday it became "marketing gone wild."

Other bric-a-brac from yesterday's meltdown. LOTS of panicked emails and some interesting data. Here's a sampling.

Here's the daily factoid piece from Dow Jones about the Dow, reprinted in full:

Dow Jones Industrial Average

• The DJIA, down 504.48 points, or -4.42%, to close at 10917.51  
• Fell for the second straight day.
• At its high, the DJIA reached 11416.45.    
• At its low, the DJIA dipped to 10917.51.   
• Biggest point drop since the first day of trading after 9-11 (September 17, 2001).
• Biggest percentage drop since July 19, 2002.
• This is the sixth biggest point drop in the DJIA's history.
• Lowest close in over two years, since July 21, 2006.
• It has dropped 3247.02 points, or -22.92%, from its record close of 14164.53, hit on October 9, 2007.    
• It has dropped -16.39% from its 2008 close high of 13058.20, hit on May 2.    
• Month-to-date, the DJIA is down -5.42%. In August, it closed up 1.45%.     
• Year-to-date, it is down -17.70%.
• Down 19% from 52 weeks ago.

And FTSE sent me this information about a presentation on 5 things that need to happen for us to avert disaster:

Scott Rothbort, finance professor at Seton Hall University's Stillman School of Business and president of LakeView Asset Management, has national media experience and is available today for interviews on the financial crisis.

Rothbort believes these five actions must happen right now:

1. ECB CUTS RATES - These jokers are still fighting inflation while the banking system burns.
2. FOMC TO CUT RATES - Why wait for the meeting later this week. Do it now.
3. SEC TO REINSTITUTE UPTICK RULE - Face it. The removal of the uptick rule was a failure. We need to go back to pre-2007 uptick rules.
4. FASB TO REPEAL FAS 157 - If the housing market was a proximate cause of the financial problems, then this was the gasoline which was tossed on the proximate cause.
5. REG T TO BE RELAXED FOR EQUITY INVESTORS - Relax Regulation T on a temporary basis so that the initial and maintenance margins for equities are 40% and 20%, down from 50% and 30%.

Rothbort, an investment advisor, previously held many high-level positions at Merrill Lynch, Morgan Stanley and County NatWest Securities.

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