As errors continue to mount at Bloomberg News, the question isn't just whose heads will roll, but from how high up on the org chart. The financial newswire avoided cratering Apple Inc stock with its premature Steve Jobs obituary last month because markets had been closed for half an hour by the time the false item was published. Bloomberg's incorrect report stating Sarah Palin had been arrested for drunk driving 22 years ago garnered little notice before it was corrected. But now Bloomberg has done some real damage. It incorrectly flashed a headline to terminals Monday stating United Airlines had filed for a second bankruptcy, sending shares to $3 from $12 and wiping out close to $1 billion in stock market valuation. After a halt in trading, the stock recovered to $11 by the end of the day. But the damage to both investors and to Bloomberg's reputation has been done. It hardly helps that the incorrect news bubbled up through a bizarre series of events:

"The bondholders, who own a portion of American Media's junk bonds, want the company's private-equity owners to give them a larger take in return for retiring some of its debt, according to sources close to several bondholders." [Post]

Time Out New York president Alison Tocci just sent out a memo to the magazine's staff addressing the "anonymous, typo-riddled post on Gossip, I mean, Gawker.com, which alludes to our imminent demise." She confirms TONY's money troubles, which were the subject of our rumormonger post yesterday, but says that the magazine's trusty investors are ponying up cash to ensure that everyone is paid! Within three months. The full zing-y memo:

Lehman Brothers is laying off as many as 1,500 people. [Dealbreaker]

American Media, the publisher of Star and the National Enquirer, has come to an agreement with its creditors to "refinance" $570 million of its more than $1 billion in total debt. That's code for going to the people you owe money to and saying, "Funniest thing—I just can't pay you. Wanna change our deal a little bit? Or would you prefer I just declare bankruptcy and we both get screwed?" As savvy financial types like to say, if you owe the bank $1 million, they own you; if you owe the bank $1 billion, you own them. Although AMI squandered millions needlessly on things like, you know, the services of Bonnie Fuller, the Enquirer's upsurge from the John Edwards scoop may be just the thing to push them back towards profitability. If they can figure out how to sell some extra ads on it, that is. AMI's ad sales were down slightly in the first half, though not as much as the rest of the industry. So chin up. Remember, down is the new flat! [WSJ]

• Obama now has a running mate. But now Joe Biden's son and brother are in the news over a hedge fund that went sour. [WaPo, Dealbook]

• An analyst suggests Lehman may be a hostile takeover candidate; a WSJ reporter explains why that's unlikely; and another points out the difficulty involved in selling off its asset management business. [NYP, WSJ, WSJ]

• Lehman Brothers' Dick Fuld was near a deal to raise $5 billion from South Korean investors, but negotiations broke down earlier this month. [NYP]

• Analysts are steeling themselves for a loss of as much as $1.8 billion when Lehman closes out the third quarter in a few weeks. [WSJ]

If you're wondering whether you're going to be employed this time next month, you're not alone. A recent survey found that nearly two out of three Americans are worried about losing their job within the next year. And how could they not? Hardly a day goes by without a bank announcing that several billion dollars has gone up in smoke, or that they've taken in several billion from the government of Dubai, Qatar, or Mongolia in a desperate attempt to keep their heads above water. Then there are the layoffs: a total of 463,000 jobs have been shed this year and many more cuts are on the way. (Unless, that is, you work in one of the few professions that does quite nicely in times like these, like bankruptcy law and repo services.) So are you going to be next? Maybe! Which is why you should know what to do—and how to behave—before and after the hammer falls and you're told to pack up your cubicle. Below, our guide to coping with the fact that your investment bank/law firm/media company has decided you're redundant.

• U.S. inflation soared to a 17-year-high annual rate in July. [WSJ]

• Morgan Stanley has offered to buy back about $4.5 billion in auction-rate securities from clients, following a similar offer by Merrill Lynch last week. The move came after Attorney General Andrew Cuomo's office sent out another round of letters to banks, including Morgan Stanley, JPMorgan Chase, and Wachovia. [Bloomberg, WSJ]

• Lehman Brothers chief Dick Fuld is in discussions with several private-equity and foreign investors about raising even more capital for the struggling bank. [NYP]

If you've visited sites like those run by New York magazine and the Observer over the past couple of months, you may have noticed, in the comments section, repeated instances of a message that begins, "Steve Ratner [sic]... has paid my wife $500,000.00 to leave me." If you saw these comments, you probably wondered what the hell was going on. Well, the Times this morning sheds precious little light on the situation because, get this, there is a Steven Rattner, he did sleep with that guy's wife and now, as a result of the angry ex-husband's smear campaign, he has vacated his job atop the private equity division of Credit Suisse. The lesson, as relayed by the Times' hotshot finance writer Andrew Ross Sorkin, is that the internet renders "helpless" ordinary plutocrats who just want to hush up stories about how they allegedly taunted and harassed the husbands of the high-class escorts they procured on trips abroad. Wait, what?

"A year ago, the conventional wisdom was, 'Yep, there are problems out there, but there’s still significant value.' Now, it’s 'Run away.'" [Times]

When does an investment banker trade up from his Swatch watch ($50) to a Rolex Datejust ($2,750) to a vintage Patek Philippe ($45,000)? Radar has a sneak peek at Damn, It Feels Good to Be a Banker, the forthcoming humor paperback by Amit Chatwani, the guy behing the blog Leveraged Sellout. [Radar]

"What we've got here is a recession in advertising. It started in local media – radio and newspapers – and is now spreading to TV." [FT] (photo by Peter Kaminski on Flickr)

When the Times got a call from Steve Jobs, the hands-on CEO of personal computer maker Apple, it had already been investigating the former pancreatic cancer victim's health for several days. Following a Monday report in the Post that some Jobs associates were "troubled by his thin appearance," the Times on Wednesday revealed Jobs underwent some sort of surgical procedure earlier this year. By Thursday afternoon, Times columnist Joe Nocera was preparing to report that Jobs was losing weight due to "ongoing digestive difficulty" and, possibly, due to a recent infection. That's when Jobs phoned to give a peace of his mind. But with a liberal interpretation of the term "off the record," Nocera would go on to finagle a scoop out of the confrontational call:

The Wall Street Journal has the skinny on the hedge funders who are "defying skeptics who questioned whether they could keep their runs going." John Paulson's fund is up 20 percent through the end of June; Phil Falcone's Harbinger Capital Partners I is up 42 percent; and Daniel Arbess, who oversees Perella Weinberg's Xerion fund, posted a 25 percent gain. What about Lehman short-seller David Einhorn, who earned such breathless coverage from New York a few weeks ago? "Up only a few percentage points through June." [WSJ]

Terribly disappointing news today for senior managing directors at Merrill Lynch: They will now need permission to hop aboard one of the company jets. (One of Merrill's Gulfstreams is at left; the full-size is here). It seems the struggling bank has realized that it might save a couple of bucks if bankers weren't commandeering a 12-seater every time they had to, say, go to Philadelphia for a meeting. So now senior execs will not only have to get permission from the global head of investment banking, they'll also have to "demonstrate there is no more efficient means of transport." Headed to Boston? We hear the Fung Wah is pretty efficient! [FT]