Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:04am EDT -
Sinking Animal Spirits
Apr 27 20098:04am EDT -
Counter-cyclical Urban Policy
Apr 26 200910:04am EDT -
Be Your Own Counterfeiter
Apr 26 20099:04am EDT -
Being Tim Geithner
Apr 25 200912:04pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:04am EDT -
What Good is the News?
Apr 25 20098:04am EDT -
Stressful Enough
Apr 24 20092:04pm EDT -
Not Regretting the Pound
Apr 24 20091:04pm EDT -
Introducing the New Ford Squeeze
Apr 24 20099:04am EDT -
Non-Economic Questions of the Day
Apr 24 20099:04am EDT -
The Stress Test Blind Alley
Apr 24 20098:04am EDT -
Happy Hour
Apr 23 20099:04pm EDT -
Recovery Without Rebalancing
Apr 23 20096:04pm EDT -
The Shape of Your Recession
Apr 23 20095:04pm EDT
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Lehman and the Exploding Hedge
According to Susanne Craig, Lehman CFO Erin Callan "receives a slimmer daily financial summary than her predecessors, relying more on data from the trading-floor contacts built during her 13-year Lehman career". I wonder when and how she found out about this?
Lehman Brothers lost about $600m on a single hedging position in the second quarter, adding to what is expected to be a larger than anticipated loss that may lead the bank to raise more capital...
The loss of roughly $600m would be in addition to setbacks Lehman is expected to announce on previously successful hedges on its large exposures to commercial and residential mortgages, people familiar with the matter said. It remains unclear whether Lehman will provide any details on the single $600m hedging loss when it reports earnings this month.
I'm beginning to think that Brad DeLong's description of my blog entry yesterday ("Felix Salmon Says Bear Stearns--Except for Its CEO--Was Smarter than Lehman Brothers") is looking increasingly astute. Lehman has no room for error right now, and certainly no room for $600 million errors. If it's capable of making mistakes of this magnitude when the stakes are so very high, then yes it should be talking to strategic investors. But not about a capital infusion; rather about an outright acquisition.
