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NEW YORK —

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A bankruptcy judge decided early Saturday that Lehman Brothers can barter its investment banking and mercantile businesses to Barclays, the first major step to wind down the nation’s fourth-largest investing. bank.

U.S. Bankruptcy Judge James Peck gave his decision in a courtroom packed by lawyers at the end of an eight-hour hearing that extended into the little hours, capping a week of pecuniary turmoil.

The deal was said to be worth $1.75 billion earlier in the week bound the set a value without interruption was in flux hinder lawyers announced changes to the terms on Friday. It may now be worthiness closer to $1.35 billion, which includes the $960 million worth tag on Lehman’s Midtown Manhattan office tower.

Lehman Brothers Holdings Inc. filed the biggest bankruptcy in U.S. history Monday, after Barclays PLC declined to buy the investment bank in its wholeness..

The British bank will take control of Lehman units that employ about 9,000 employees in the U.S.

“Not only is the sale a good match economically, but it will save the jobs of thousands of employees,” said Lehman lawyer Harvey Miller of Weil, Gotshal & Manges.

Barclays took on a potential liability of $2.5 billion to be paid as severance, in case it decides not to keep certain Lehman employees beyond the guaranteed 90 days. But observers have said Barclays’ main reason for acquiring Lehman is to get its people and demeanor in North America, make widespread layoffs less likely.

“It’s that cannot be imagined to me that they exist able to run the occupation without people,” related Lehman’s financial adviser, Barry Ridings, of Lazard Ltd.

Barclays had little contest to land the deal.

Miller said that before it filed for bankruptcy, Lehman had negotiated with just one other bidder, Bank of America Corp. BofA instead announced Monday that it would pervert with money Merrill Lynch & Co., saving it from a fate similar to Lehman’s. That deal was originally valued at $50 billion.

Miller said that since Lehman filed for bankruptcy, Barclays had been the only buyer to express interest in acquiring strange to say parts of the 158-year-old investment row.

“The essential nature of this affair is to continue a business because the benefit of the economy,” Miller said in court.

AT THE DEMILITARIZED ZONE, Korea Dank and mossy, the “raid” tunnels dug by North Korea unbefitting its border with the South are a grim reminder the two sides remain at war, locked in a tenuous, decades-long truce watched over by soldiers, tanks and barbed wire.

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Now, the communist regime’s confirmation it is reviving its nuclear reactor and speculation about Stalinist leader Kim Jong Il’s ill health are calorific up tensions, with some fearing Kim’s king of terrors - with no named follower - could cause the regime to fall and hordes of North Koreans to flee.

Analysts say the South Korean government is acting on a contingency plan laying out to what extent to handle possible crises, from a nuclear leak to a regime collapse.

Meanwhile, at the border - the world’s most heavily fortified - the breath of life goes on in what passes for normal for the 2 1/2-mile-wide strip onward the 38th counterpart that separates the two states.

South Korean soldiers stood guard Friday as tourists milled about Panmunjom, the “Freedom Village” intimate the Demilitarized Zone. They gawked at North Korean soldiers, who in turn peered through binoculars trained southward.

At a South Korean military camp in Cheorwon, near the border, troops in continuance break sheltered in the shade smoking cigarettes. In the barracks, soldiers played board games season others wrote letters home.

There was no palpable apprehension of danger along the border, but experts say officials are preparing despite the worst.

“We are concerned about instability,” Defense Secretary Robert Gates said Thursday in London. “I think that all of North Korea’s neighbors are concerned about instability, in no small part because of the possibility of large flows of refugees.”

Impoverished North Korea has a populousness of 23 million, and else than 6 the multitude of them are going ravenous, according to the United Nations’ World Food Program.

Until the early 1990s, the number of North Korean defectors - multiplied slipping athwart the Yalu River into China - numbered a handful a year. But with food scarcities worsening since then from floods and mismanagement, the number has risen steadily to more than 1,000 defecting yearly, according to South Korea’s Unification Ministry.

Former public prisoners in North Korea describe a regime that demands total loyalty to Kim Jong Il, the “Dear Leader.” His father, guerrilla fighter-turned-communist leader Kim Il Sung, founded and built the Stalinist nation with an iron fist, brooking in not at all degree inconsistency and dispatching dissenters to grueling labor camps.

He also engineered a system of personality that encompassed him and his son, who took over after his father’s 1994 king of terrors in what became the earth’s first communist dynasty.

WASHINGTON —

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Ben Bernanke didn’t sugarcoat the situation. He couldn’t.

Financial market conditions had degenerated to a full terror, credit is frozen, money market funds are losing money. Even strong institutions such in the same manner with Wall Street’s remaining investment banks were under unusual pressure, the Federal Reserve chairman told House Republicans in a briefing Friday.

Leave things unchecked, he said, and face deep and extended recession, according to notes taken by dint of. a House GOP aide at the sitting.

At one remarkable assembly in the Capitol on Thursday death and in a line of conference calls the next day, Bernanke and Treasury Secretary Henry Paulson laid on the outside nothing less than a nightmare scenario if Congress failed to permission to pass a hatch to use breathtaking amounts of taxpayer money to bail out the financial markets.

Fear is a great motivator - and it helps explain lawmakers’ quick bipartisan embrace of the massive federal mediation in the markets.

Don’t go along, Paulson uttered Thursday night at the auditory with leaders in both parties, and Wall Street’s abortion will mean a global relating to housekeeping crisis. Bernanke warned of a profound recession without immediate action. The remarks were characterized by two congressional aides in the room, who required anonymity to discuss the private meeting.

“The room got excessively serious, very without delay,” said a House Democratic aide who attended the session.

“When you listen to them describing this, you gulp,” said Sen. Charles Schumer, D-N.Y. He said he felt the weight of “narration suspension over them” in the room.

House Financial Services Committee Chairman Barney Frank, D-Mass., was at the meetings, too. But just as telling, he said Friday, was a conversation he had with a big lender who warned Frank that he was about to be unable to issue car loans. The panic steady Wall Street was infecting Main Street and it was time to act.

House Speaker Nancy Pelosi, D-Calif., did mention Paulson that lawmakers were being asked to swallow a sore pill, according to Democratic aides. She said the bailout proposal should include Democratic priorities such as extending unemployment insurance and providing aid to ailing state governments to pay during Medicaid shortfalls.

With a require to be paid of $700 billion and the intrusion into the rid market, the proposal is drawing reservations from Democrats and Republicans. Some feel they are being stampeded.

But Bernanke and Paulson sustain great weight on Capitol Hill.

CLEVELAND —

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Giant floating fields of algae are back in strength this year on Lake Erie and scientists are trying to figure out why.

The blooms of the pea-soup colored algae - in the same state pregnant they’ve been showing on satellite photos - are toxic to fish and small animals and irritating to humans. The lake once notorious by dint of. reason of its pollution is cleaner than ever, yet the algae continues to thrive.

“Algae is a big deal, especially the microcystis, what is often called the blue-green algae,” said Tom Bridgeman, a professor of environmental science at the University of Toledo’s Lake Erie Center. “It’s not aesthetically pleasing at the time it gets on boats or rots onward the shore, but it can likewise be a health hazard.”

Nine of 11 samples taken Sept. 3 from near West Sister Island, northeast of Toledo, were more toxic than guidelines set through the World Health Organization, related Geoffrey Horst, a Michigan State University graduate student who studies the algae. It won’t kill vulgar herd, but at least part it’s going to give swimmers a rash.

Water utilities along Ohio’s Lake Erie stay be consumed thousands of dollars a twenty-four hours to kill the dirty algae and to treat the corrupt smells and bad tastes that the organism causes, officials said.

But it’s not going away.

“It’s now blooming in the proportions that it was in the bad old days of the 1960s and early ’70s,” Bridgeman declared. “There’s a mystery to it because the lake seemed to have existence getting cleaner, but things being so the algal blooms are worse.”

Even vapid, the algae poses a problem: Decomposition of dead algae uses up oxygen and creates oxygen-free dead zones in the lake.

“There has already been a fish die-off in Lake Erie this season,” said John Hageman, laboratory manager at Ohio State University’s Stone Lab without interruption Gibraltar Island.

Researchers suggest the algae might be blooming because it’s fed by abundant phosphorus, which is running into the lake from increased suburban development.

“The same nutrient-rich fertilizers which cause our grass and crops to grow can cause the algae to grow in the lake,” said Bridgeman, who calls the algae “Green Kool-Aid.”

—

Information from: The Plain Dealer, http://www.cleveland.com

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The benchmark S&P 500 index had its biggest two-day rally since October 21, 1987, two days after the 1987 stock place of traffic crash.

Led by U.S. Treasury Secretary Henry Paulson, officials are operating on a solution to mop up hundreds of billions of dollars worth of bad mortgage liability.

In another extraordinary action, the United States joined the United Kingdom in temporarily banning bets that financial stocks will fall, while the Federal Reserve reported it will use $50 billion to hindmost money-market mutual funds.

The moves came at the end of every agonizing week for Wall Street, in which Lehman Brothers filed for bankruptcy, underwriter American International Group (AIG.N) was bailed out by the government and Merrill Lynch (MER.N) was forced into a shotgun marriage with Bank of America (BAC.N). Investors had worried that the confluence of crises severely threatened the stability of the U.S. economy.

But even with the furious two-day deride, stocks still ended essentially flat in a week marked by the agency of extreme volatility — with the Dow plummeting more than 500 points on Monday, only to rise on Tuesday and drop again forward Wednesday.

"The government plan is seen as a comprehensive solution rather than a series of ad hoc, in fragments moves," said John Praveen, capital investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey, noting that the ban in continuance short-selling was also contributing to the surge in financial stocks as short sellers bought stocks to close extinguished their positions.

An S&P index of financial stocks (.GSPF) jumped 11.1 percent.

Short sellers, who profit when public securities fall, have been blamed as antidote to contributing to the demise of Lehman Brothers and the steep declines in other financial stocks this year.

The Dow Jones pertaining mean proportion (.DJI) closed up 368.75 points, or 3.35 percent, at 11,388.44. The Standard & Poor's 500 Index (.SPX) advanced 48.57 points, or 4.03 percent, to 1,255.08. The Nasdaq Composite Index (.IXIC) projectile up 74.80 points, or 3.40 percent, to 2,273.90.

Shares of Washington Mutual (WM.N) surged 42.1 percent to $4.25 after the Wall Street Journal reported that Citigroup (C.N) was considering making a bid for the U.S. savings and loan. Citigroup shares leaped 22.7 percent to $20.65 on the New York Stock Exchange.

Shares of Morgan Stanley (MS.N), punished earlier this week as investors fretted about the outlook for the last two remaining U.S. investment banks, jumped 20.7 percent to $27.21. Shares of rival Goldman Sachs (GS.N) climbed 20.2 percent to $129.80.

Morgan Stanley's talks with Wachovia Corp (WB.N), China Investment Corp and other institutions continue, a one lacking in proper reserve through the matter said, yet the rebound in its securities gives the investment bank more time to consider its options. Wachovia's stock surged 29.3 percent to $18.75.

Trading was heavy on the New York Stock Exchange, through about 3 billion shares changing hands, remoter above endure year's estimated daily mean proportion of roughly 1.9 billion, space of time on Nasdaq, about 3.8 billion shares traded, also trouncing last year's quotidian average of 2.17 billion.

Advancing stocks outnumbered declining ones on the NYSE by about 7 to 1 and in continuance the Nasdaq, by about 2 to 1.

(Additional reporting by Steven C. Johnson; Editing by the agency of Jan Paschal)

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Palin, John McCain's vice presidential running mate, is a strong social and exact conservative. She opposes miscarriage and gay rights and, as an evangelical Christian, believes in a God-centered universe. But these matters are neither her top priorities as governor nor even her second-tier concerns. Her social conservatism has been muted.Instead, her agenda because being elected governor in 2006 consists of oil and gas, taxes, and morals improve. "Just behold at the bills she put her name on," says John Bitney, her policy director during her first year as governor. "They speak for themselves." The bills involved a new arrangement for building a natural gas pipeline, higher taxes on oil companies, and new ethics rules covering the governor's administration and the legislature.Those were her major initiatives. Next on Palin's bound of priorities were maintaining the solvency of the pension program for teachers, satirical spending in the state's capital packet, and assuring that parents who home tutor their children aren't discriminated against by state regulations.Palin has frequently voiced her support for anti-abortion bills requiring parental consent notwithstanding girls with less than 17 and outlawing partial-birth abortions. "Alaskans discern I am pro-life and have none wavered in my assurance in the sanctity of every human life," she declared in April.But she refused to make acquainted the pro-life measures in a special legislative session last hop zealous to the gas pipeline. "These issues are so important they shouldn't be diluted with oil and aeriform fluid deliberations," she said.Later, she declined to call a separate special sitting to take up the abortion bills. Her reasoning: Pro-lifers had failed to persuade her the bills could pass the state senate. Nor would she be intermediate to pressure couple Republican senators who opposed the legislation to change their minds. Palin isn't willing "to spring out in front of the bus on things that aren't moveable" in the legislature, says state Republican chairman Randy Ruedrich.Palin's conservatism, like Reagan's, has never been in doubt. When I talked to her last year, she described herself as "pro-business and pro-development." The Anchorage Daily News said the spending cuts she imposed in 2007 "may be the biggest single-year line-item veto total in state recital." Of course, Palin is moreover pro-gun.When she attended a governor's conference in Washington last February and was interviewed attached C-SPAN by Steve Scully, she endorsed "across the board" tax cuts as Americans "know most of all" how to apply their own cash. Palin said she's "committed" to fabrication Alaska "more of a contributing state .  .  . and less self-reliant on the federal government."Her biggest task as governor has been to start construction of the gas pipeline to the lower 48 states. She tossed out the lover contract her elder, Republican Frank Murkowski, had reached with three oil companies and negotiated a new deal with a Canadian company. The goal, she said, is "to feed hungry markets in our state, subject energy costs, help secure the race, [and] flow that energy into hungry markets across the nation. That's my mission."Her record being of the kind which governor hardly qualifies her as a doctrinaire conservative. She proposed a graduated custom on oil as the price soared, that time signed a bill passed by the legislature that company the novel assess tribute upon rate even higher. Reagan, by the way, divide taxes in 1981 and raised them the next year.Why did Palin push a pipeline and favor a tax hike? Bitney says the rejoin is simple: Alaska needs more energy as older oil fields get to be depleted, and the pipeline will generate jobs and receipts. As with regard to raising taxes, Palin follows the command of the state constitution to get the maximum advance the interest of from the state's natural resources.Bitney says Palin never instructed her gubernatorial staff to "go after premature labor" or any other issues of touch to social conservatives. In a campaign debate in 2006, she said that both unrolling and creationism should be taught in public schools. "You know, don't be afraid of education," she said. "Healthy argue is so important and in the way that valuable in our schools."The nearest set time she thought more good of her comment. "I would not push the declare board of education to add creation-based alternatives to the state's required curriculum," she said. But there shouldn't be "a prohibition against debate if [creationism] comes up in class."As governor, Palin has appointed a delegate of education and nine members of the state board–without applying a litmus test on creationism or evolution. And there's been not any effort, one and the other by the agency of Palin or her appointees, to annex creationism to the curriculum.Palin's most celebrated achievement of practical conservatism was killing the notorious Bridge to Nowhere in Ketchikan. She had endorsed it in a gubernatorial campaign discussion, but changed her mind after being elected. By in that case, the project had become a symbol of wasteful spending, and the congressional earmark with money for it had been rescinded.But the three members of Alaska's congressional delegation–Ted Stevens, Lisa Murkowski, and Don Young–still favored the project. Their expectation was that Palin would keep it alive with federal highway funds and state money. She refused.The anointing of Palin as the new Reagan is surely premature. Let's say she's a potential Reagan. Like him, Palin has focused on a scarcely any big issues, while allowing others in vogue with conservatives to fall by the wayside. This brand of pragmatic conservatism worked for Reagan. It's worked for Palin overmuch.Fred Barnes is executive editor of THE WEEKLY STANDARD.

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A deal could include sovereign wealth fund China Investment Corp taking a significant martyrdom in the combined company, the journal reported, citing people familiar with the matter.

CIC's interest may be contingent on Wachovia being able to offload some of its mortgage assets, the Journal said. The CIC discussion has been preliminary and has not been raised through Wachovia's board, the paper said.

CIC dampened speculation on Friday that it could be ready to increase its stick in Morgan Stanley as a senior CIC official was quoted through the agency of the Xinhua news operation similar to observation Morgan Stanley and Goldman Sachs (GS.N) were capable of tackling their problems attached their have a title to.

However, sources familiar with the plans told Reuters onward Thursday that CIC, that bought 9.9 percent of Morgan Stanley last December, is in talks to raise its holdings to as much as 49 percent.

One roadblock to a deal between Morgan Stanley and Wachovia could be how the U.S. government's rescue plan addresses the mortgage portfolio at Wachovia, the Journal declared. Other issues include price and Morgan Stanley's leverage.

In the past week, Morgan's blockhead plunged and its debt insurance prices surged in the midst of dismay that even large broker-dealers could not sustain the current crisis. A series of moves by the U.S. government to limit short sales and to sop up toxic bank assets sparked a rally in financial shares.

The U.S. government said on Friday said it is preparing to take on hundreds of billions of dollars in bad pledge fault from the banks' comparative estimate sheets, after curbing short selling and guaranteeing mutual funds in an exertion to stabilize financial markets.

(Reporting by Ben Klayman, editing by Chris Wilson)

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Sayonara, samurai: When the U.S. brokerage failed, Japanese investors were left holding $1.8 billion of its yen-dominated bonds

by dint of. Kenji Hall

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Plenty of Japanese lenders got burned when Lehman Brothers (LEH) went bust. Major banks, for instance, had been counting on Lehman to pay back every estimated $2.7 billion in loans, but they’re likely to recoup only a fraction of their investing..

And big lenders aren’t the only ones feeling the pain. When Lehman filed for bankruptcy forward Sept. 15, midsized regional banks, animated existence insurers, and pension funds were left holding nearly all of the U.S. brokerage’s $1.8 billion in yen-denominated, or samurai, bonds. With the first half of Japan’s fiscal year ending in just two weeks, Japanese financial institutions now stand over against the prospect of writing off losses estimated at $3.5 billion, Credit Suisse (CS) estimates.

An even bigger concern: a collapsing samurai bond market. This week, Deutsche Bank (DB), Société Générale, and a unit of British profit National Grid (NGG) shelved their plans to sell samurai bonds, and commercial is at a standstill. As Japanese investors finish the coin tap, multinationals are deprived of a key source of affordable credit. "We have been helping the banks of the world extend the maturities of their debt," says Mizuho Securities’ algebraist Tetsuo Ishihara. "The financial sector is funded very short-term, and if you’re funded short it could kill you, like Bear Stearns (JPM)."

Japan is human being of virtuous a handful of places in the world where banks and businesses be able to assemble billions of dollars in a matter of days. After the U.S. subprime lend market imploded last summer, credit dried up in the U.S. and Europe, and Japan has be suitable to the fallback fund-raising market for corporate and sovereign borrowers such being of the class who Wal-Mart (WMT), UBS (UBS), Daimler (DAI), and Australia & New Zealand Banking Group.

That explains why samurai durance issuances have soared lately. This year more 2.4 trillion yen ($22.3 billion) in samurai bonds have been sold, exceeding the 2.25 trillion yen ($20.9 billion) sold for all of 2007, according to Shinsei Securities estimates. Last week, Citicorp (C) sold a 315 billion yen ($2.9 billion) samurai bond—the biggest ever.

Japan’s ultra-low interest rates lay behind the market’s surge. Samurai bonds offered Japanese investors higher returns than other yen-denominated debt. Though issuers were offering returns of 0.3% to 1% higher than government bonds, those rates were a steal compared with rates in the U.S. or Europe. Since most issuers were big-name banks and businesses with strong put faith in ratings, Japanese investors assumed that they were making a safe wage.

So much during that idea. Lehman’s was the first samurai bond default from that time December, 2001, when the government of Argentina suspended payment on its foreign debts. In the past few days, more investors have sold samurai bonds issued by other U.S. brokerages, to lavish up cash and prevent the possibility of further losses. Others have begun pricing the securities at 20% of what they originally paid. "We haven’t decided the kind of we will do yet," says a spokesman for Shinkumi Federation Bank, the central bank for 164 Japanese confidence cooperatives, what one. had invested $55 the public in Lehman samurai bonds.

Brokerages have been fielding calls from frantic investors who want to perceive when they have power to recoup more of their money and how much they should write off in losses for the fiscal earliest half, traders say. "They’re disappointed when I tell them that it will be some time under the jurisdiction we get details from Lehman’s books," says JP Morgan’s (JPM) chief credit strategist, Mana Nakazora.

There are since few investment options left for Japanese investors. "They are conservative," says Nakazora. "They won’t buy entangled securitized bonds; they are looking according to something that’s easy to see and sure."

There’s no telling when the samurai market will recover. The Sept. 11, 2001, terror attacks in the U.S. and Argentina’s default depressed the samurai market in the place of years. It wasn’t until late 2005 that activity began to open up again. One faith, presume traders, is that the U.S. government will approve a sweeping plan to relieve financial companies of their bad assets. Lehman bond-holders hope some of that money would stamina to paying them off or rolling over their debt into a new durance. But until currency and doubt not derivatives markets calm down, self-styled samurai issuers and investors won’t accept any way to hedge their risk and may stay away, says Credit Suisse Managing Director Ayumu Fukuzawa. "The situation is changing every day, every hour," says Fukuzawa.

From Standard & Poor’s Equity Research

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GOLDMAN REITERATES CONVICTION BUY LIST ON MORGAN STANLEY

Goldman Sachs analyst William Tanona says although some of the recent price decline in Morgan Stanley (MS) stock has been understandable given issues at Lehman Brothers (LEH), Merrill Lynch (MER) and AIG (AIG), and he believes most of the downward spiral was exaggerated by short sellers.

With the SEC and FSA implementing new short sale rules, enhanced fluidity facilities through Fed and a consortium of global banks, and indications that the government may make stable funds, Morgan Stanley should be well positioned to capitalize upon the body future opportunities. He believes Morgan Stanley is entire during the time that one ongoing entity.

Tanona sees significant opportunities for Morgan Stanley to outperform over next 6-12 months. He keeps $44 six-month price mark.

PIPER JAFFRAY UPGRADES ORACLE TO BUY FROM NEUTRAL

Piper Jaffray analyst Mark Murphy says Oracle’s (ORCL) $5.4B pro forma (PF) revenue and $0.29 PF EPS compares to $5.4 billion and $0.27 consensus. He notes $5.85-6.01 billion total second quarter PF revenue guidance, PF EPS of $0.35-$0.36 compared to agreement of $6.23 billion and $0.35.

While Oracle only reported full-year EPS decline one time in the last 10 years, Murphy thinks Oracle’s EPS resiliency has improved, of the same kind with recurring maintenance revenue comprises 50% of revenue vs. 37% in fiscal year 2002 (May), and Oracle is advantaged by greater economies of scale today. He notes ORCL shares trade at 12 state of things his $1.59 calendar year 2009 EPS forecast, the lowest multiple in many years, including the last recession in 2002.

He rrims EPS estimates from $1.54 for financial year 2009 to $1.51 and $1.76 for fiscal year 2010 to $1.72. He sets $23 value target.