Which will fail first - Lehman, Wachovia, Merrill or Citibank?

The business model of leveraging credit upon credit has failed. It wasn't a Bear Stearns model, it was an industry. There were many culprits, banks without the intellectual capital to grow the business of the basis of investment banking or trading like Goldman, Morgan Stanley or JP Morgan, that just leveraged their balance sheet and kept leveraging and leverage. A crazy credit environment, a housing bubble and a strong economy all contributed to the environment. But, when you build with leverage on leverage, it doesn't take too much to bring down the house.

The house is falling now. These banks are down 10% every day. The model has failed and there is nothing left. This will continue until we see a major failure.

I believe that Citi will be bailed out by some middle eastern prince or sovereign wealth fund. I am less certain of Lehman, Merrill and Wachovia. I think that one of these banks will fail and fail soon.

However, I could be wrong so I wouldn't dream of shorting one of these.