Lehman Plans Higher Capital Raising, Expects to Post $2.8 Billion Net Loss

Link:
http://docs.google.com/Edit?docID=dcbc2vhk_2hcv5hwgv

Comments:

Lehman is another well organize Wallstreet firm who is trying to prevent a tipping point in the firm's ability to stay solvent.

• Hedge Effectiveness: Was negatively impacted due to problematic assets that were difficult to correlate and experienced basis drift during the process.
• Realizing Losses: Chief Financial Officer Erin Callan found the bid side to many of the less liquid assets they sold, a good move, even though it may have been painful.
  
• Illiquid Assets: (BYOF) Bring Your Own Financing is the mantra, Unfortunately not always possible with some of the more radioactive structured assets.
• De-Leveraging: Lowering the leveraged risk profile makes me think of a team of experts in a large plane going down. "Throw everything out that isn't welded down, we got to get more lift so we can suck in more financing."

Food for thought:

Another Wallstreet Firm in Trouble: This isn't Beat Stearns but the continued decline of the various underlining assets being held by both Wallstreet and Investors is toxic.

Best Practices: Hedging is an art form with science mixed in to make it more respectable. It is easy to miscalculate a variable or not refresh the data frequently enough and later find yourself upside down on the hedge.

Chicken Salad: As we all have heard before, "You can't make chicken salad out of chicken poop." There is still alot of poop out there.


Jim

Note: Your comments are welcome.