That short-term relief rally I conjured up over the weekend lost steam awfully fast. The euphoria of the GSE bailout was quickly negated by the realization that our government will be out of bullets for a while, and will be able to do very little in the light of more “too big to fail” type banks (Lehaman today, maybe Wamu and Wachovia tomorrow). The scary thing about Lehman, was first their lack of noise since Erin Callan touted their alleged sound financial condition, and now, they are particulary stubborn about finding a good buyer…haven’t they heard the saying “beggars can’t be chosers?”

Their newest trick is spinning off their really bad stuff into its own entity, and having Blackrock help them con someone into buying it.

Lehman is “formally engaged with” with BlackRock Inc., the biggest publicly traded U.S. fund manager, to sell about $4 billion of the investment bank’s U.K. residential mortgage holdings, according to today’s statement. Lehman said the transaction would help reduce the firm’s stake in home mortgages by 47 percent to $13.2 billion.

Non-amortizing U.K. mortgages…Just GREAT. If you chose to read the rest of their plan, don’t faint at the size of their exposures relative to the value of the company/assets.

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While this is next bit is pretty off topic, I think it is something of note as an individual investor who is thinking about catching the next bottom. The author (Rev Shark) is a contributor to Jim Cramer’s RealMoney.com, but often clashes with Cramer, which is funny. This is a segment from one of his daily updates:

Unfortunately, Wall Street is in the business of keeping people in stocks. However, you would think that every once in a while, even for a little while, they might acknowledge that maybe it’s not a good idea to be 70% or 80% exposed to equities, especially when things are downtrending.

One of the big farces on Wall Street is the whole idea of “defensive stocks.” There are very few, if any, safe havens in bear markets, but Wall Street will pretend that you are better off holding some “safe” stock rather than cash. In most cases, these safe stocks simply don’t go down as fast as the broad market, which is great for mutual funds concerned about relative performance, but not so good for people trying to make money.