The global financial system teeters on the edge of a collapse the likes of which has not been seen in at least 80 years. Thanks to the complexity of the financial instruments involved, the amount of leverage used to trade them, and the global interconnectedness of it all, it could be the worst collapse in financial history. The key question at this point is "What will make it stop?"

The latest news features a bankruptcy of a 158-year-old financial firm, the acquisition of one of the most storied names on Wall Street, and a major restructuring of one of the world's largest insurance companies. Here are the details:

• As I predicted this morning, Lehman Brothers Holdings Inc. (NYSE: LEH) is expected to file for bankruptcy tonight, according to Bloomberg News. That outcome was far from certain this morning as Bank of America (NYSE: BAC) was expected to bid for the "good" part of Lehman. But the US declined to backstop Lehman's bad part so Bank of America withdrew its offer and now Lehman shareholders will be wiped out. It is not clear how severely the Lehman bankruptcy will hurt global markets.
• The good news, as I posted this afternoon, is that Bank of America has agreed to pay $29 a share for Merrill Lynch & Co., Inc. (NYSE: MER) according to the Wall Street Journal. This is great news because it gives Merrill shareholders a $12 a share premium and takes out what would have been the next firm to fail. I am not sure how Bank of America will make the deal pay off, but now attention focuses on the next domino to fall.

I've been long shares of Adams Golf (NASDAQ: ADGF) for some time and, so far, it hasn't provided the returns I had hoped -- to put it mildly. That's probably largely attributable to broader economic malaise but, nevertheless, shareholders have seen the market value of their shares decline rapidly and they're lost more than 90% of their value since the company's IPO in 1998.

That makes the timing of founder Barney Adams' book The Wow Factor: How I Turned One Great Idea and My Unbridled Enthusiasm into a Golf Revolution a little strange.

The book is a reasonably entertaining look at how Mr. Adams, a former Corning Glass engineer, battled adversity to make Adams Golf the largest golf company IPO in history on the strength of a revolutionary fairway wood that he had designed.

The problem with a Barney Adams inspirational book is that, from a business perspective at least, Adams Golf could hardly be considered a success, except in the sense that it raised a boatload of money through its IPO, but that led to a class-action lawsuit. Since inception, Adams Golf has lost more than $34 million, and shareholders have lost their shirts. The company has made Mr. Adams a rich man but, unfortunately, it's been at the expense of shareholders. And the looting continues: Mr. Adams was inexplicably paid $319 thousand for his role as chairman of the board in 2007. I wonder how many thousands of dollars per ceremonial banging of the gavel that is!

I have tremendous respect for Barney Adams' entrepreneurship and determination in getting the company off the ground, and his book is a worthwhile read for entrepreneurial upstarts. It's a shame that his commitment to realizing shareholder value doesn't match that.

How can Mr. Adams deliver value to shareholders? It's easy: the stock is currently trading at a discount to its net current assets and, with growing sales and a leadership position in the all-important hybrid club category, Adams Golf could probably be sold to a larger company for a large premium to its current share price. Click here to read my analysis of the Cleveland Golf sale and how it relates to Adams. Full Disclosure: Zac Bissonnette is long shares of Adams Golf.

Reuters reports that Bank of America (NYSE: BAC) just announced it was withdrawing its interest in Lehman Brothers Holdings Inc. (NYSE: LEH) -- likely sealing Lehman's fate. But it is still interested in buying an investment bank. Now, the Wall Street Journal reports, Bank of America is in pursuit of Merrill Lynch & Co., Inc. (NYSE: MER).

As I posted earlier this afternoon, Bank of America's decision to dump Lehman increases the odds it will file for bankruptcy. But the Journal writes, "Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter. Much remains uncertain and conditions were fluid."

That is an understatement. But Merrill could be a difficult bull to swallow. As I posted, it has salable assets worth $40 a share and is currently trading at $17. But nobody seems to know how much Merrill's liabilities would subtract from that $40 a share. And when Bank of America is done looking at Merrill, it could reach the same decision it did with Lehman.

Update. DealBook reports that Bank of America could offer $25 to $30 a share for Merrill -- a big premium -- and the deal could be closed by tonight. If so, that would be great news in my humble opinion.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

For the most part, I've been an avid user of Google (NASDAQ: GOOG) since it launched ten years ago. It's almost like a natural reflex for me.

I'm not alone. In fact, this partially explains why mega players such as Yahoo! (NASFDAQ: YHOO) and Microsoft (NASDAQ: MSFT) can't seem to make any headway.

So, that's why it was notable when a new search engine hit the internet: Cuil.

The hook? Well, there are more pages indexed. And, the interface is flashier. In other words, it's the anti-Google approach. Interestingly enough, the two founders, Anna Patterson and Russell Power, are former Google employees.

However, when Cuil launched, the messaging was fairly striking; that is, the mission was to be the Google-killer.

In the end, Cuil got a harsh lesson. For users -- who have many choices -- there must be compelling reasons to make a change. Simply put, Cuil fell well short of expectations. For example, a good number of search queries were off-the-mark. As a result, the media slammed Cuil.

According to Techcrunch, Cuil's traffic has plunged since the July launch. It also looks like the company's vice president of product, Louis Monier, has resigned his post (he is a guru of search and a former Google employee).

Something else: Cuil has raised two rounds of venture capital (the latest round was for $25 million). And the valuation? A whopping $200 million (this is according to the analytical work of PE Data Center). In other words, investors will probably need to wait quite awhile to get a return -- if ever.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website.

Reuters reports that derivatives traders have opened an emergency trading session this afternoon to settle a variety of derivatives trades involving Lehman Brothers Holdings Inc. (NYSE: LEH). As I posted earlier today, I think the most likely option for Lehman is a bankruptcy filing by the end of the day today. And these derivatives trades are intended to minimize the losses to a bankruptcy filing. To that end, the trades conducted this afternoon will expire if Lehman has not filed for bankruptcy by midnight tonight.

The emergency trading session will last for two hours this afternoon. Reuters writes, "The session will run from 2 p.m. to 4 p.m. and will involve credit, equity, rates, foreign exchange and commodity derivatives. The aim is to reduce risk associated with a potential bankruptcy filing by Lehman. Trades are contingent on a bankruptcy filing at or before 11:59 p.m. New York time Sunday. If there is no filing, the trades cease to exist."

I endorse this idea because it looks to me like a prudent move that would minimize the damage of a Lehman bankruptcy filing. I wish I knew how much such a filing would cost Lehman's stakeholders or how much this emergency session will limit its damage. Unfortunately, I don't know. Even if Lehman does not file for bankruptcy, this emergency session looks worthwhile because it won't cost much to conduct and if there is no need for it, the trades will expire worthless.

Now that a mass of mortgage-related write-downs has swamped major financial companies, Wall Street has turned its attention to the second half of the year to see whether the beatings will continue. Early indications are that they will. Both Lehman Brothers (NYSE: LEH) and Washington Mutual (NYSE: WM) have said they will take reserves for several billion in their third quarters.

The bank that has been hit hardest by the crisis may not even be American. Reuters reports that UBS (NYSE: UBS) will have to write down another $5 billion on its risky investments in the second half of the year according to the Sonntags Zeitung newspaper.

The IMF has predicted that total write-downs driven by the mortgage crisis will hit over $1 trillion. Only about half of that has hit the markets so far. If banks face a tremendous increase in reported losses, most will have to raise money which will cause another round of dilution.

Bank and brokerage stock prices are going much lower.

Douglas A. McIntyre is an editor at 247wallst.com.

This post is one of six articles on beverage-related stocks. Here are five other investment ideas to sip on.

"PepsiAmericas (NYSE: PAS) is the world's second-largest bottler of PepsiCo beverages," notes Vahan Janjigan, noted quantitative analyst and editor of the industry-leading The Forbes Growth Investor.

"PepsiAmerica's is 44% owned by PepsiCo (NYSE: PEP). Brands licensed from PepsiCo accounted for 90% of 2007 sales. The U.S. was responsible for 70% of first half 2008 sales.

"This territory consists of 19 states mostly in the Midwest. Pepsi, Mountain Dew, and Aquafina are top brands in the U.S. Central and Eastern Europe generated 25% of sales. Markets include Ukraine, Poland, Romania, Hungary, Czech Republic, and Slovakia.

"The U.S.is a mature market with limited growth opportunities and has presented special challenges in recent years as consumers shy away from traditional carbonated soft drinks (CSDs) in favor of non-carbonated soft drinks and energy drinks.

"This evolution has opened the door to boutique beverage companies, allowing them to grab market share from the traditional players.

"More recently, the U.S.has been hampered with a slowing economy. Of course, raw material costs have been soaring everywhere. By raising prices,management has boosted profitability at the expense of sales.

"At the same time, it is investing in growth abroad. It took a 60% stake in Sandora, a juice company in Ukraine, enhancing the company's ability to supply markets in Belarus, Azerbaijan, Russia, and other East European and Central Asian countries.

"Second quarter net sales increased 11.8% to $1.34 billion, with 8.7 percentage points coming from acquisitions. Price increases offset a decline in volume. Higher ingredient costs depressed the gross profit margin by 68 basis points to 40.78%.

"However, strong expense controls boosted the pro forma operating profit margin by 21 basis points to 12.35%. Pro forma net income jumped 21% to $90.9 million or 72 cents per share.

"A weak economy, changing consumer preferences, and competition could hurt sales volumes. Indeed, despite a recent gain in market share for CSDs in the Midwest, management expects U.S.volumes to fall through the second half of 2008. Full-year adjusted revenues should grow 13-14%.

"Earnings should rise 16-18%. Expansion in Europe should support growth through 2010. PepsiCo and CocaCola branded products account for roughly 25% of the highly fragmented beverage market in Central and Eastern Europe. This is a market ripe for consolidation. It provides a rich pipeline of acquisition candidates."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

I talk to quite a few small business owners. And just a year ago, things looked pretty good.

But with the sudden credit crunch -- and slowing economy -- things have certainly turned for the worst. Unfortunately, I know a variety of people who have had to shut down their businesses. Hey, even mega companies, like Lehman Brothers (NYSE: LEH), are having a hard time staying afloat.

Well, this is the topic in a piece in the New York Times. Basically, it looks like many small business owners are looking for alternatives, such as full-time jobs (if they can find them) or going back to school.

Actually, this should be no surprise. Running a small business is extremely difficult and time-consuming. And, because of the lower margins, it doesn't take much for a profit to become a loss.

Moreover, some of the biggest problems are in ailing sectors, like housing, construction, finance, travel, and so on. Something else: rising energy and commodities prices are making things even worse.

No doubt, things look pretty glum. But keep in mind that some of the greatest businesses emerge from such times. After all, just look at Microsoft (NASDAQ: MSFT) and Oracle (NASDAQ: ORCL). These companies started during the mid 1970s, when the U.S. economy was mired in stagflation.

In other words, if you have a great idea for a business -- and want to take some risks -- then give it a shot.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website.

Last week's preview raised the question of whether consumers were turning to comfort foods in these uncertain times, specifically in terms of second quarter earnings of Campbell Soup (NYSE: CPB) and Krispy Kreme (NYSE: KKD). Campbell's strong earnings growth topped expectations, while Krispy Kreme narrowed its loss, though it fell short of estimates.

This coming week should bring reports from more food-related companies, from cereal maker General Mills and food packager CongAgra to grocery chain Kroger, to the parent companies of restaurants Cracker Barrel, Olive Garden, Red Lobster, Carl's Jr., and Hardees. Also look for reports from tech-related companies such as Oracle, Adobe, and Palm, as well as from financials Morgan Stanley and Goldman Sachs, and from economic bellwether FedEx.

Here's what analysts surveyed by Thomson Financial are expecting from some of the companies reporting earnings this week, as compared to their results from the same period of last year:

A number of people in the government are disturbed by the payments that the CEOs at Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) will enjoy. According to Reuters, "The Federal Housing Finance Agency (FHFA), which has taken over the two government-sponsored enterprises, said it could weigh a variety of factors, including whether the executives had committed fraud or insider abuse."

The issue of fraud at the two big mortgage companies has not been raised frequently, probably because it is not the issue. The firms were highly regulated and their auditors would probably have detected a systematic cooking of the books.

The trouble is much more basic. The huge problems at Fannie and Freddie were caused by stupidity and not systematic plans to fool shareholders. The chief executives at the two companies made decision similar to those made at Wall Street banks and brokerage firms. In a sentence, they gambled that the prices of housing in the U.S. would never fall.

Fannie and Freddie CEOs have employment contracts. They are not different from the ones that caused large pay-outs to the head of Merrill Lynch (NYSE: MER). It is part of doing business at huge companies.

Pay them and send them on their ways. Enough time has been wasted complaining about the disaster's past and not enough is being put toward fixing it.

Douglas A. McIntyre is an editor at 247wallst.com.

A significant part of the nation's refinery capacity was off-line after Hurricane Ike moved though the Texas coast line. It now appears that some of those plants may not be operating again for several weeks.

According to Bloomberg, "Almost 20 percent of the nation's oil refining capacity was shut after Hurricane Ike slammed into the Gulf Coast, limiting fuel deliveries and prompting analysts to predict gasoline prices may again reach $4 a gallon."

If the estimates are correct, consumers, the car industry, and airlines could be in for another round of pain. It has been almost universally believed that with crude falling to $100, gas prices would drop closer to $3, which would help an economic recovery in the U.S. A new period of $4 gas would shatter that.

One of the effects of the hope for lower fuel costs was that airline and auto stocks have come off of their lows. Some of the stocks have doubled in less than three months.. For example, AMR Corp. (NYSE: AMR), parent of American Airlines, is now over $10, up from a 52-week low of $4.

The early part of the week may set a trend for share prices in the two sectors. If refineries stay closed for two or three months, some of these stocks may lose half of their value again.

Douglas A. McIntyre is an editor at 247wallst.com.

This post is one of six articles on beverage-related stocks. Here are five other investment ideas to sip on.

"Coca-Cola (NYSE: KO) is a remarkably profitable franchise," says Stephen Leeb. In The Complete Investor, he looks at its expanding market opportunities and expanding dividend.

" Selling its soft drinks and other products to just about every nation in the world, Coke has operating margins of 26.1% and return on common equity of 30.9%. On top of this, it delivers a dividend yield of 3%, higher than the S&P 500's 2.4%.

"And since the payout ratio is only 52.6%, the company could nearly double the yield with no problem at all. While the yield isn't likely to double overnight, Coke clearly has been moving in the direction of favoring higher dividends. Over the past five years, dividends have grown by 11.4% a year.

"In times of inflation, it is particularly critical to invest in companies that can generate growth in both earnings and dividends and that can handle cost pressures with high-margin products. Coke clearly fits this bill.

"The company has been expanding its reach in noncarbonated drinks like juice, water, and sports drinks such as Powerade and Vitamin Water.

"This latter area is Coke's fastest-growing segment, chalking up 12% volume growth in 2007 vs. just 4% for the company's eponymous Coke soft drinks.

"Clearly Coke has regained its footing with successful new product offerings as well as revitalized sales growth in international markets, which provide the bulk of sales and earnings.

"Looking ahead, the company's focus on new high-growth products indicates that earnings could keep growing in double digits, with fewer fluctuations than for most other U.S. large-cap stocks. This together with the dollar's chronic weakness makes multinational Coke a solid long-term holding for conservative investors."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Lehman Brothers Holdings Inc. (NYSE: LEH) is likely to file for bankruptcy today. The reason is that the Treasury and White House are smarting from criticism of their $29 billion bailout of Bear Stearns and the $200 billion to $800 billion Fannie and Freddie nationalization. Neither of these moves has stopped the serial sell off in the shares of investment banks and other firms saddled with crumbling real estate assets. So now the powers that be have decided that they'll tighten up their moral standards and refuse to bailout Lehman.

As I posted, the basic problem is that Wall Street thinks the Treasury will cave in and put money into the Lehman bailout. But despite reports of a proposal to hive off the good part of Lehman from the bad part -- financed by other Wall Street banks -- such a resolution does not appear likely. That's because Wall Street does not want to risk its slim capital shoring up Lehman's bad part -- $85 billion worth of commercial real estate and mortgage-backed securities (MBS). These banks rightly fear that they would lose their investments and sink the entire industry in the bargain. In addition, these bad bank financiers don't want to provide the backstop to enable the winner of the bidding on the good bank to surpass them by picking up Lehman's assets cheaply.

Assuming that plan does not work and that the government refuses to step in to finance the bad bank, this leaves two basic options: Lehman files for bankruptcy or other banks liquidate Lehman in an orderly fashion. Bankruptcy might be a relatively orderly process. According to FOXbusiness, "if Lehman entered into bankruptcy protection, the brokerage units would enter Chapter 7 liquidation and a court-appointed trustee would liquidate the firm's assets and give customers back their money. Generally, securities a customer holds at a brokerage firm are legally the investor's property, and aren't exposed to the claims of the firm's creditors." A bankruptcy would likely wipe out Lehman common shareholders.

The dollar registered another week of impressive gains against both the euro and the pound. So where is the dollar headed from here, looking forward, a quarter or two?

BloggingStocks asked economists David H. Wang and Richard Felson to outline the dollar bullish and bearish views, respectively. The dollar finished the week at $1.4217 versus the euro and at $1.7927 versus the British pound. The greenback has advanced about 11% and 10% versus the euro and pound, respectively, in the last quarter.

Economist Wang said he sees a continuation of the dollar's rally in Q3 and Q4. Wang argues the U.S./global economic slowdown and accompanying credit concerns "will create a period of retrenchment on the part of institutional investors, and even once high-flying commodities won't be spared." The benefactor? The U.S. dollar, in a flight to quality, flight to safety.

"The dollar will rise for reasons that have nothing to do with U.S economic growth and everything to do with a lack of venues to put that capital to work productively," Wang said. "The prevailing psychology in Q3 and Q4 will be capital preservation." Wang sees the dollar strengthening to $1.30 versus the euro and to $1.65 versus the British pound by early 2009.

Conversely, economist Felson sees an end to the dollar's rally. Felson argues that the global slowdown will continue in Q3 and Q4, reducing both international trade levels and commodities demand. The former will see investors pull money out of stocks, the latter out of commodities as asset plays, with the euro and British pound benefiting.

After months of denial and blame-shifting, Lehman Bros. (NYSE: LEH) is finally admitting that its condition is dire and is shopping for a buyer, bailout, or some other means of winding down the firm's leverage without wreaking havoc to the financial markets at large.

And now that's looking difficult. The Wall Street Journal reports (subscription required) that it has become "increasingly clear that a clean sale of the entire firm to a big bank would be too difficult to execute. . . Neither Barclays nor Bank of America wants to buy all of Lehman without some government assistance, and so far the government has been reluctant to do so."

Banks are considering that a fire sale of Lehman's assets, including commercial real estate, could further drive down prices and force other banks to take mark to market writedowns in a vicious cycle.

It's good to see that the Federal Reserve is feeling less generous about using taxpayer money to fund a bailout, although it might be that that's the least bad of all the possible outcomes. If it comes to that though, it probably won't include anything like the $10 per share gift that was given to Bear Stearns shareholders.