Comments on: Lehman Brothers (NYSE: LEH) Is Not Dead Yet http://www.dailyreckoning.com.au/lehman-brothers-3473/2008/08/22/ An independent perspective on the Australian and global investment markets Sun, 21 Mar 2010 08:37:19 +0000 http://wordpress.org/?v=2.8 hourly 1 By: testuserhere http://www.dailyreckoning.com.au/lehman-brothers-3473/2008/08/22/comment-page-1/#comment-41553 testuserhere Mon, 15 Sep 2008 17:31:27 +0000 http://www.dailyreckoning.com.au/?p=3473#comment-41553 lehmann is dead... rip if these banks were contributing as much to the economy as they think were, i doubt they would have gone under so fast. i dont understand why everyone thinks a particular bank adds such a lot of value to the economy that it cant fold... buckle under... go kaputtski... other banks can and will be created in response to market needs... why do we need to prop these monsters up? the problem seems to be in managing counterparty risk... what happens when you have bought an instrument from a bank and the bank no longer exists... once we quantify the risk involved we have won half the battle... no one seems to be interested in doing the same, definitely not the bankers :) ... the events of the last 12 months in the banking industry have been hilarious to observe... had a lot of good laughs on this... for a bunch of people who think they are so smart, most seem to be pretty dumb... lehmann is dead... rip

if these banks were contributing as much to the economy as they think were, i doubt they would have gone under so fast. i dont understand why everyone thinks a particular bank adds such a lot of value to the economy that it cant fold... buckle under... go kaputtski... other banks can and will be created in response to market needs... why do we need to prop these monsters up?

the problem seems to be in managing counterparty risk... what happens when you have bought an instrument from a bank and the bank no longer exists... once we quantify the risk involved we have won half the battle... no one seems to be interested in doing the same, definitely not the bankers :) ...

the events of the last 12 months in the banking industry have been hilarious to observe... had a lot of good laughs on this... for a bunch of people who think they are so smart, most seem to be pretty dumb...

]]> By: Coffee Addict http://www.dailyreckoning.com.au/lehman-brothers-3473/2008/08/22/comment-page-1/#comment-41436 Coffee Addict Mon, 15 Sep 2008 01:11:46 +0000 http://www.dailyreckoning.com.au/?p=3473#comment-41436 My predicted timing for Lehman's demise was optimistic. I don't have a crystal ball which is good enough to indicate exactly when a bank run will start so I shouldn’t have guessed. I am surprised that no other comments were posted. My predicted timing for Lehman's demise was optimistic. I don't have a crystal ball which is good enough to indicate exactly when a bank run will start so I shouldn’t have guessed. I am surprised that no other comments were posted.

]]> By: Coffee Addict http://www.dailyreckoning.com.au/lehman-brothers-3473/2008/08/22/comment-page-1/#comment-37190 Coffee Addict Mon, 25 Aug 2008 01:36:21 +0000 http://www.dailyreckoning.com.au/?p=3473#comment-37190 I have had Lehman "on watch" for the past 18 months. Dan is correct to indicate that the sum of the parts (for banks such as Lehman) are very significantly less than the whole. Selling off many of the parts will keep these parts alive and provide temporary liquidity for the core. Lehman's managers always tout liquidity as a key goal. However liquidity is not the same as underlying profitability. Liquidity can only be applied to debt interest for so long - eventually an over geared, unprofitable enterprise will be bought out or go bust. Will Lehman find a buyer other than the Fed? I don’t think so. Buyers are interested only in the bits that are now being sold off. The Fed could find itself funding the purchase of a decayed, debt laden skeleton and a brand name for a hundred billion (or so) ever declining dollars. What is the likely timing of all of this? My best guess is that D-Day for Lehman will happen in 12 months. The investment grade commercial paper market is not yet bad enough to bring Lehman down. Lehman has also invested heavily in the equity tranches of structured products. . Commercial default rates are still pretty low (around 1.5% - 2.5% (depending on quality)). Lehman may just survive if commercial paper defaults don’t double or quadruple (again) in the next 12 months. The future is anyone’s’ guess, I'm not hopeful, but there is a chance that the L curve will remain flat on its current plateaux. Any further thoughts from the Old Hat Factory or elsewhere? I have had Lehman "on watch" for the past 18 months. Dan is correct to indicate that the sum of the parts (for banks such as Lehman) are very significantly less than the whole.

Selling off many of the parts will keep these parts alive and provide temporary liquidity for the core. Lehman's managers always tout liquidity as a key goal. However liquidity is not the same as underlying profitability. Liquidity can only be applied to debt interest for so long - eventually an over geared, unprofitable enterprise will be bought out or go bust.

Will Lehman find a buyer other than the Fed? I don’t think so. Buyers are interested only in the bits that are now being sold off. The Fed could find itself funding the purchase of a decayed, debt laden skeleton and a brand name for a hundred billion (or so) ever declining dollars.

What is the likely timing of all of this? My best guess is that D-Day for Lehman will happen in 12 months. The investment grade commercial paper market is not yet bad enough to bring Lehman down. Lehman has also invested heavily in the equity tranches of structured products. .

Commercial default rates are still pretty low (around 1.5% - 2.5% (depending on quality)). Lehman may just survive if commercial paper defaults don’t double or quadruple (again) in the next 12 months. The future is anyone’s’ guess, I'm not hopeful, but there is a chance that the L curve will remain flat on its current plateaux.

Any further thoughts from the Old Hat Factory or elsewhere?

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