Still bleeding

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: also leave Lehman looking far less diversified and less stable.

This week Goldman Sachs, the only investment bank still in decent shape, cut profit forecasts for all of its main capital-market rivals, including Lehman, citing the need for further write-downs and a drought in key business lines. (Some analysts had cut their Goldman forecasts the week before.) It also released a scathing report on American International Group, putting its losses from mortgage-related swaps at up to $20 billion, and even suggesting the giant insurer could suffer an “impairment of counterparty confidence”. The spreads at which big banks lend to each other hit a two-month high. One of them may go bust in coming months, mused Kenneth Rogoff, the IMF’s former chief economist, one of a long list of those who think the worst is yet to come. Given what has already been endured, that is a blood-curdling thought.