It’s great that Credit Suisse is offering to buy back Lehman structured product debt. We are keen to see such a generous and positive response from the investment banking community to the current troubles and would ask only, where are all the others queuing up to buy Lehman debt?

Credit Suisse has a history of such generosity. After the LTCM collapse and the Russian government default, it was the bank that came with a positive message to its investors, offering to buy them out of their distressed debt.

But step back and take a better look and ask the question, AT WHAT PRICE DID THEY BUY THAT DEBT?… In the eye of the financial storm that hit Russia in 1998 the folks at Paradeplatz thought a bid of 17 cents in the dollar was good enough to secure Russian government debt. Two and a half years later that debt was apparently then sold for as much as 80.

Perhaps the smarter damaged investor should wait for administrator PricewaterhouseCoopers to do its thing and see if the recovery value is higher. But, again, thanks for the generous offer...

Fresh from the latest news of another intervention by the central banks of Japan, the US and Europe, and the bailouts of AIG, Merrill Lynch and Lehmans, we have done some calculations. We were going to do them on the back of a matchbox, but there wasn’t enough space for all the zeros. The rough conclusion to our basic, transparent and easy mathematics is that well over US$300 billion has just been pumped into the ‘free’ financial markets.

Wow! Is the obvious response, yet apparently – at least in the case of the US$85 billion pumped into AIG about 24 hours ago – this 'cash injection' is not enough to rid the markets of risk.

Back to the analogy. One of our groups is made up of a bunch of multinational, overpaid egotists into which benefactors (be it an Arabian oil baron, or the US Federal Reserve and its friends) seem happy to pour endless amounts of cash into a system which they can never beat. However much money they spend, it is becoming clear that neither the dark masters of the financial markets nor Manchester City will never be in a position to control their respective systems.

While the disintegration may mean the players in the world of football will have to sell one or two of their fancy car fleet and their wives or girlfriends may have to manicure less and even give up on hair extensions, those retail investors that play in the financial markets will have to give back their only car and get used to saying the word penury rather than pension.

Has this unnamed individual bought a car flashier than any other? No. Has he finally bought that yacht he has been promising himself? No to that too. Has he purchased the kind of country estate that bulge-bracket boys find time to boast of? No again.

Of course, in these straitened times he is not going to extend his credit line all that distance. Those of you that have the right answer will know that the Lehman banker has bought, and paid for a subscription to Structured Products magazine. It happened this morning. Our surprise is presumably his joy.

You can almost hear the heavy exhales of distributors’ relief, especially when the prospect of continuing to use Lehman was enticing to say the least. Lehman’s CDS rate skyrocketed to over 400bp a few months ago, which meant the products they issued would have far better terms than other issuers with lower CDS spreads. The temptation was there: better products for your customers coupled with the expectation that hell would freeze over before letting Lehman go bust seems a reasonable rationale to carry on buying the bank’s products.

Perhaps their prudence should be applauded, however, many of these distributors did sell products issued by Lehman prior to discontinuing the relationship. It remains to be seen whether these products, capital guaranteed or not, will give a return (the latest valuation of Lehman’s securities is 60 cents on the dollar) or another investment bank will purchase the products at a significant discount. S&P today downgraded Lehman’s credit rating to selective default, meaning ‘payments may not be made on some financial obligations’. Confidence-inspiring indeed.

Perhaps the one good thing to come of all of this is that investors who purchased Lehman Minibonds, credit-linked products with CDOs forming the underlying collateral of which possessed mark-to-market values of around 30%, have been put out of their misery, the final nail has been hammered home.

As BofA’s stock fell, along with the stock of almost every other bank around, the biggest loser was Lehman Brothers. Accustoming themselves to cheaper mayonnaise in their canteen turned out to be the least of the worries of employees of a bank that has now filed for bankruptcy: the holding company has aimed at Chapter 11; the remainder at Chapter 7.

The filing includes a request to continue paying salaries to employees, part of a series of first day motions that will “allow it to continue to manage operations in the ordinary course”. Whether shareholders, bondholders and investors in structured products will be as fortunate remains to be seen.

Merrill can consider itself lucky. It has long been courted by BofA, but had been suffering a mighty hangover from its sub-prime exposure – as FT research showed in August, the last eighteen months have seen the bank undergo writedowns and credit-related losses of nearly $52bn: half of its profits over the past 36 years. But BofA itself has not been immune to the market crisis, selling its equity prime brokerage division to BNP Paribas in June.

The frantic weekend could have many consequences for the structured products world, not least in the UK, where around 25% of product is understood to have been issued by the now-failed US bank.

Lehman’s disappearance, although troubling and likely to shake investor confidence over counterparty risk even further, may remove a thorn in the side of structurers at other better rated banks. For months, structurers across Europe have complained that Lehman has frozen primary market volumes, as its lower credit rating enabled the bank to sell products with more attractive coupons. Investors still wanted the same coupon, but not the risk of Lehman paper, which created a much tougher context for other banks selling products. Bear Stearns, a week prior to its collapse, was offering reverse convertibles with a 27% contingent coupon after 18 months, which perhaps proves the same adage – if the deal seems too good to be true, then it probably is.

The ethos of Lehman’s US business was “not all structured investments are created equal.” The slogan has proved a rather sad prophecy for the bank and its structured product investors. By coincidence it also happens to be the tagline for the new ETF i-shares advertising campaign – let’s hope the company experiences the more positive intended consequences of the marketing strategy.

The Merrill acquisition on the other hand, will leave its competitors with little room to relax, creating a banking behemoth worth just over $200 billion. This year’s other monster merger, JP Morgan and Bear Stearns, creates a bank valued at $141.5 billion, leaving Goldman Sachs ($60.73bn) and Morgan Stanley ($41.29bn) looking like mere minnows.

Tomorrow evening will see BofA receive a bevy of journalists at Tate Britain for Francis Bacon: A retrospective, which the bank is sponsoring. Perhaps it is to witness a lap of victory round the gallery by the no doubt jubilant hosts, or simply to gaze upon Three figures for the base of a crucifixion and ponder what lies in store for the now few pure investment banks that remain.

The hedge fund phenomenon of the last few years has altered the way that financial markets work. Previously hedge funds were viewed as a necessary evil, offering liquidity in times of crisis. Now many of these funds are full scale investors, although they will always be opportunistic.

This Monday the FSA announced that it had broken new ground by taking enforcement action against a hedge fund manager for using inside information to deal in corporate bonds. “This is particularly important to hedge fund managers since it highlights the FSA's determination to take action against insider trading - and hedge funds can expect similar and tougher actions, particularly since last year the FSA published the findings of its visits to Hedge Fund Managers in Market Watch 24 to review the controls in place to mitigate the risk of market abuse and commented that it was ‘disappointed by some of what we saw’,” was the rather lengthy justification for action from the FSA.

Good to see the FSA showing its teeth, but this is surely the tip of the iceberg. Can it really be true that a hedge fund has never transgressed in this fashion? Surely not, but signifying intent is the first step for any regulator, taking action is the second step. Next, the FSA needs to keep up the fishing and get its gnashers ready for more action.

The regulators announcement concluded with: “Would you be interested in an interview or article on what steps hedge fund managers need to take to ensure their business and staff are not breaking the regulations, whether deliberately or inadvertently. This is particularly the case with hedge funds as they regularly receive privileged information.”

Everyone who has ever tried to manufacture a structured product based on hedge funds knows that the transparency of these funds is not always what they would like, which has a lot to with the receipt of privileged information. That will not change, but it may be worth looking out for the filing of presumably hopeful defences that regulations were breached “inadvertently”.

It’s a loud campaign, but it also leans towards the creative. Another part of the campaign – not the billboard-based bit – relies on a couple of pictures showing 14 sets of twins. The purpose, and it is a neat idea, is to show that “Not all ETFs are created equal”. You can see the point, sort of, although the imagery may perhaps be a little disturbing when you get past the initial surprise.

But the more pressing point is, what are all of these twins doing on the iShares campaign. Don’t they have jobs? How can they all justify the time? So indeed, we are not all created equal – if you are a twin you get to take time off work to be with your twin and many others. The truth is out.

The markets liked the news – why wouldn’t they? The most powerful capitalist force in the world has finally stepped up and taken responsibility for allowing the US economy to overheat. But why now, and, more to the point, why no action earlier? President George Bush was presented with the idea that Freddie and Fannie should take over the 50% of the US mortgage market that they didn’t own many months ago, and he rejected it. Several money-losing months and the loss of one prominent US investment bank later, the Bush administration has changed its mind again on the virtues of intervening in financial markets that are becoming less free by the day.

Missing the earlier opportunity to put Freddie and Fannie in the limelight was a mistake, and now the US taxpayer – like the UK taxpayers who were told to hold up Northern Rock – will bear the cost.

The markets have reacted positively, but what will they say in the medium and long term? Probably the same as they are saying today. After all, if you were deep in debt you would welcome the introduction of a lender of last resort with pockets as deep as the US government.

How long before some clever egghead locked in a structured products laboratory comes up with a cunning new product designed to exploit a market that we now know will never be allowed to fail?

And it’s Merrill Lynch that is leading the way, with Mast. If you want to know what the acronym stands for then read yesterday’s story on Structured Products News, but if you want to get the theme, here goes.

Using the word Mast allows Merrill to justifiably put an old-fashioned tea clipper on the cover of all their marketing material. Although the product has yet to find its way to a launch (no pun intended, but happily found) in the UK market, all that sailing from the Olympics on the TV will have helped the cause. And all the talk of commodities, which were first transported in size in these kind of ships, will have also added a following wind (pun intended).

In straitened times, it is this kind of creativity that will restore order to damaged financial markets. Back to what the acronym stands for. It stands for everything: equity, fixed income (or just bonds), commodities and currencies. So it covers the whole gamut of what structured products can reasonably and regularly offer.

While we ponder more headlines in our attempt to match this refreshing rush of SP-style marketing, we await also your offerings. The usual answers taped to a bottle of champagne are gratefully accepted.