There's no mark-to-market for this shit they have on their books, and no one wants to risk their own mark-to-model not knowing what the hell is going to happen with all the systemic risk the big institutions have, so maybe they will let Lehman fail just to show they aren't going to backstop everything under the sun with taxpayer dollars anymore. But where will it end? Will they let WM, AIG, NAC, etc., etc. fail?
It is any wonder they work like hell to defer marking down values on positions held? They are feeling the flames a-lickin'. If they are indeed levered at near 30-1, and if their positions are indeed losing value, and if they have indeed deferred marking them to a true value, at some point, even if transitory in nature, their positions may actually have negative values. It doesn't matter if their positions may have greater value in the future, if they are technically in default, they may be shut down, just like a broker will close a position if a customer's margin is insufficient to cover the price of a position, regardless if that position may have greater value 'later on sometime'. The amazing thing is not they may cease to exist, but that they have been able to keep the house of cards from collapsing as long as they have. Probably long overdue. They sold their soul to the devil, and now he's collecting. An eye for an eye. I welcome another bout of selling.
Just thinking, the 30:1. They were all capitalized, it seemed, at around 33 : 1, with 30 to 35 Billion in capital. But I remember UBS bringing 90 billion back on the balance sheet. I remember because the employees were shocked, and they all called lawyers - their deferred comp was at risk. So, that 33 : 1 figure was bogus. Now these CDS are levered to the moon. So I sorta thnk the leverage is so ridiculous as to be unmentionable. Think about it. Look at the references that say you need to see the books to see the liabilities, and Dimon was 'shocked' when he saw Bears'. What did he see? Lehman isn't Bear, but Mother Theresa never worked there either. Mull this one over. 10bb wiped out, employee deferred. Jobs. Bear, same. What are the ramifications of the NY/Metro/Ct/NJ corridor. That's serious money in an economy. And the Yankees won't even make the playoffs, either.
Be leveraged on the upside, and you'll swear upon your life that G_d himself is smiling upon you. Be leveraged when the party stops, and G_d himself can't save you.
I am thinking the same.. Here's what I am trying to understand: Lehman has never borrowed directly from the Fed, and the window is open for them. I don't see why they can not start borrowing now to ride out these times. I say who cares if they can not afford to raise capital with risk spreads now - they don't need to. They can borrow from the fed instead. This short raid is just that ... a self fulfilling prophecy. Tell me why I'm wrong, and I'll appreciate being corrected.
failure of LEH AIG WAMU WB etc is a 'good thing'.lets hope LEH goes on monday, that should be a tremendous boost to stocks. Id be a buyer. has anyone here studied the early 80s thru the early 90s?the faster these dogs bite the dust the better it will be for everybody.
http://blogs.wsj.com/economics/2008/09/12/why-hasnt-lehman-come-calling-on-feds-discount-window/ Here's an interesting post here... " Bob and Kafka⦠I apologize for my tone. It is probably due to the fact that I cannot sell my shares, even though I fully see and understand the momentum trade eroding the value of my familyâs nest egg. Rather than simply point out what you donât know, Iâd like to help you understand the true HOW and WHY that Lehman could run out of capital (p.s. It is the same issue AIG is facingâ¦) The rating agencies may downgrade Lehman based on their concern that Lehman is unable to raise long term capital. The rating agenciesâ assessment is due to the precipitous decline in their share price. That share price decline is largely due to (1) unsophicated sellers working off flawed assumptions likes those you presented, and (2)short sellers seeking to achieve this very outcome. Employees own 30% of the firm, so I really doubt they were the one hitting Tuesdayâs $8 premarket bid when KDB talks fell⦠Now, if Lehman was to be downgraded, indentures within market standard derivatives documentation require them to post increased collateral to their counterparties. While this might only be an incremental .25% on the notional value of those contracts, across billions that starts to add up⦠Lehman currently has an estimated liquidity pool of $42 billion. That is far greater than Bear Sterns had, and more than sufficient to fund ongoing operations if they can mitigate the rating agencies on their ability to raise capital (ie by selling Neuberger Berman). Broker dealers do not fund themselves in the equity markets. As such, share prices are not an accurate measure of short term solvency. Comment by ex Lehman - September 12, 2008 at 7:56 pm "
thats funny. i think i saw 350 million one day and 250 mill the next day. those volumes are not mom and pop selling and are not shorts manipulating the stock. its big boys wanting out bad.