Is everybody ready for the newest game on Wall Street?

It’s time to play Deal or No Deal, America!

Despite all protestations by Helicopter Ben and Hammerin’ Hank, the Fed held an emergency Friday night meeting to discuss the future of Lehman Brothers.  Deal, or No Deal?

The game is on, but it’s not like anything you’ve seen with Howie Mandel.  In this version, Hank and Ben are trying to pick a bank to buy Lehman Brothers, but the problem is this:  All of the suitcases are winners, and they are waiting to be filled by Treasury and The Fed!  The financials have called Treasury and The Fed’s bluff.  No buyer has stepped up to the plate to save Lehman…not without a sweetheart deal like JP Morgan Chase got for Bear Stearns.

In other words, what if all the pretty girls on Deal of No Deal said “Hey Howie, one of us is a millionaire!  We’ll stop the show unless you and The Banker make US an offer!”  It’s a mutiny, and everything’s topsy-turvy now.

So now, the clock is ticking.  If Hank and Ben don’t pick a suitcase and fill it up with enough taxpayer money before Sunday night…it’s No Deal.  And No Deal is the end of the game for America.

The Fed said “We won’t give a sweetheart deal, we’re still The Banker!”  The financials replied “You’re full of shit.  You have until Sunday, and then Lehman goes under and takes the entire financial sector down with it…and that will lead to a complete loss of confidence in the markets.  Game over.  We’re The Banker in this game now, and you’ve got to make a Deal.  You have no choice!”

The Street knows that Hank and Ben have no choice.  Failure to save Lehman Bros. will ruin WaMu, AIG, Wachovia, and trigger a sweeping collapse of the markets.  They will crash and take our economy with it.

We’ve entered Moral Hazard territory now.  The Banker is now the Player, and the Suitcase Suits are now calling the shots on the show.  After Bear Stearns and Fannie and Freddie,  dozens of banks and financials are now Too Big Too Fail.  The only thing keeping these banks afloat is the general consensus that the Fed will bail them out.

If Lehman goes under, people will be asking “Am I next?”  They will panic.  They will cause panic runs on the financials that are on the edge right now.  The companies that have lost half their value in the last 12 months will lose the other half in 12 hours.  It will be a massacre.

The game of Deal or No Deal is on.

Tonight’s meeting means the Fed blinked first.  Banks will be bailed out with magically created fiat money.  Failure to do so by the Fed will end the fiat money game…and the US economy.

You’d better believe that Hank Paulson has his marching orders.  His orders are to save the economy until the election, then it becomes the next President’s problem.  In the halls of power, frantic calls are being made and gentlemen’s agreements are being reached tonight.

The Fed couldn’t directly bail out Lehman.  But nobody wants to be the guinea pig to save them, because whoever does take Lehman is going to have to make the deal next time…and then next time…and then next time.  They’ll be in for the Fed right up until the bad deals close THEIR doors.

Nobody wants to be the sacrifice.  The larger banks think they will all make it.  They are waiting for the Fed to make them the Deal of the Century.  And they know the longer they wait, the better the deal gets.

As Hank and Ben make offers, the financials are just laughing.  They know one of them has the suitcase with billions of taxpayer money.  They are waiting for a high enough offer from The Banker.

And The Banker has no choice either.  The clock is ticking.  Asian markets open in less than 48 hours.  If there’s No Deal on the table by 7 PM Sunday, then people will start asking why…why Fannie and Freddie got the MOTHER of all Deals, and Lehman Bros. gets nothing.  Everyone else will quit the game in anger.

Global financial meltdown.  And the financials know they have all the power in this equation for now, especially in a tight election year.  Bread and circuses (and crappy gameshows with Howie Mandel) keep America fat and happy.  If those stop, the American people start getting out of control.  They start realizing they’ve been used for generations.  They start to rebel.

So very much is at stake in this game of Deal of No Deal.  There’s an entire global financial system to lose.  But the Fed has already lost.  They made the precedent with Bear Stearns and Fannie and Freddie.  Now they have to decide how to bail out the rest, or the financials will pull the plug on the game and everyone will lose.

As it is of course, the American taxpayer is the big loser.  You and I are paying for this game, and it’s a game we can’t afford anymore.  The Fed has a few months to go before dumping the disaster in the next President’s lap, but that plan came unraveled.  The bailout of Fannie and Freddie gave Wall Street two days…and even then Lehman Brothers was falling.

Not even the largest bailout in the history of the universe could give the Fed more than a couple of market sessions worth of relief.

So we wait as The Banker makes offers to the girls with the suitcases for a big enough Deal…or it will be No Deal for the global economy.

And the best part is when the next major financial goes under, Washington Mutual, AIG, whoever…we get to play Deal or No Deal all over again!

The only loser is you.

And eventually…The Fed will be out of deals to make.  The game ends when the Fed and the financials reach No Deal.

And so does our economy.

Be prepared.

Cross-posted at ZVTS..