A U.K.-based newspaper, The Observer, reported yesterday that Richard Fuld, CEO at Lehman Brothers Holding Inc., is slowly but surely being relieved of his duties. "His credibility is shot," a senior source within Lehman is quoted as saying. I suggested back in March that Dick should have his parachute ready. Fuld bought time in June by allowing his Chief Financial Officer and Chief Operating Officer to be sacked, but that is all it is, a matter of time.

[update, August 29--]
The Wall Street Journal is reporting that Lehman will lay off between 1,000 and 1,500 employees, or about 6% of its workforce. Other than that, business is good.

Back from Baxter S.P.

If I am alone in the woods, do I hear the trees falling on Wall Street? The quick answer is "hell, no"--which is precisely the point of our annual pilgrimage to South Branch Pond Campground. No TV or radio, no e-mail, no phone calls. Just roll out of our sleeping bags at dawn and climb above treeline in the crisp morning air, far from the madding crowd. Saunter back to the campground in the late afternoon and slow-fry some quesadillas. Maybe go for a paddle after supper to check out the loons at the far end of the pond. Life is simple and sweet.

Still, I know the trees are falling. They were falling before we left and are not yet done falling. While we were gone, Lehman Bros. tried to sell itself to the Asians, who are holding out for a better price. They just might get it. Meanwhile Merrill Lynch, Goldman Sachs, and Deutsche Bank became the latest investment firms to fess up to government regulators. They agreed to buy back auction-rate securities that had been improperly peddled to clients earlier this year. The industry-wide tally has reached $50 billion in buybacks and over half a billion in fines. Finally, Fannie and Freddie came ever closer to issuing super-senior debt to taxpayers like you and me. Even though we don't want it.

From the top of Bald Mountain (there is no trail, so we had to bushwhack) could be seen the winding course of the East Branch of the Penobscot, the riverbanks finely tinged with crimson in an otherwise broad green expanse, the first faint traces of autumn. Much wider and deeper runs the red ink on Wall Street.

Updates: Following the Money

The window is closing on Seth Carey's casino. This morning's Boston Globe is reporting that two North Shore racetracks, Suffolk Downs and Wonderland Greyhound Park, are combining operations, perhaps with the goal of launching "a premium resort-style casino." This is bad news for Rumford lawyer Carey and his envisioned Evergreen Mountain Four Season Resort & Casino in Oxford County. With gaming revenues stalling nationwide, Carey's only chance for a viable enterprise rests on further delay in Massachusetts, where Governor Deval Patrick supports the idea of casino development. Mainers are still waiting for details from the Evergreen campaign regarding exact location and investor support.

Wall Street banks raise money any way they can. Desperate for cash, Merrill Lynch is expected to cut its dividend to shareholders by at least half. This long overdue step would be a first (Merrill has never cut its dividend since it became a public company in 1971) and follows the company's announcement two weeks ago that it sold a tranche of mortgage-backed securities at a huge discount to face value. Meanwhile, Lehman Brothers is selling off a third of its commercial real-estate assets, three-quarters of which are mortgages sure to be be discounted.

But the money keeps going out faster than it comes in. Last week Citigroup and UBS joined Merrill in agreeing to buy back auction-rate securities sold to retail clients earlier this year. Combined price tag: $40 billion (and climbing, as JPMorgan Chase and Morgan Stanley have just settled). For pushing ARS, several of these firms have been fined by government regulators to the total tune of $200 million. And the write-downs for mortgage-backed securities are never-ending. J.P. Morgan revealed in a 10-Q filed Monday with the SEC that its collateralized debt lost $1.5 billion in value just in the past month. That's 75% of the firm's second-quarter profit--gone.

MDOT puts pavings projects on ice. Apparently $105 million does not go as far as it used to. The Maine Department of Transportation originally planned to pave 825 miles of the state's roads in 2008. But with the price of liquid asphalt jumping 150% since January, the Department is going to come up 85 miles short for the money budgeted.

The news has Peru residents patting themselves on the back. In 2007 the Town voted to borrow $400,000 to address a backlog of local road projects. At the time there was no competition for contractors from the state, which had placed a moratorium on paving projects pending the results of a bond referendum. Peru's timing looks even better now that paving costs have skyrocketed, easily justifying the borrowing costs of the ten-year loan from the Maine Bond Bank.

Living to Tell the Tale

Taking the time to refresh a blog becomes a challenge when the outdoors beckon. August in Maine is about as good as it gets, and the blueberries this year on Whitecap are just plain ridiculous. Yesterday my wife and I were scooting up the mountain yet again when we met an elderly gentleman descending, in one hand a trekking staff and, in the other, a four-quart basket filled right to the top with plump blueberries.

This was David Worcester of Hanover, and we got to chatting. David told quite a story of a tragic incident on Whitecap 49 years earlier, when a party of berry-pickers, himself included, got zapped by lightning near the summit. All were stunned; one was killed. Photos of the expedition are posted at David's website.