Posted on 12/29/2008 7:39:56 PM PST by CutePuppy
Lehman was playing rough. Can’t remember the exact details, but something along the lines of soliciting bidders, then using the bids to drive up to cost of a bailout, then using the new government offer to drive up the bids etc.
Per my brokers, Lehman got left out in the cold because they tried to squeeze all rescuers too hard.
Couple that circumstance with FASB 157, 20 years of “moral hazard”, and the likes of Barney Frank, Chris Dodd and friends, and you have a perfect storm.
A complementary article to the one above :
The Weekend That Wall Street Died
Coincidentally, abuse on the CME is one mechanism that makes it possible. Chicago. Where corruption apparently knows no bounds.
I commented and posted several articles on the predatory shortselling and its destructive potential. Also here and here
Unfortunately, instead of paying attention to the destructive potential of the tactic and what to do about it, the discussion often goes off track into topics like "banning" or "CEO greed and mismanagement" and "deserving it" etc. This was just one of the issues that I felt Chris Cox at SEC should have been paying much closer attention to and more involved with, but he handled it abysmally. IMO, he was ineffective and seemed out of his depth in that position, and Bush's economic team from the beginning was not impressive.
Granted, to foresee an attack on the entire industry (or the system), especially vulnerable due to necessary (by its business structure) leverage and lack of liquidity to survive "run on the bank" redemptions may not have been easy, but that extraordinary massive "overinsurance" should have been a tip-off that consequences may be more than ordinary.
re above: “CME” should read “CBOE” and “CHX.”
I agree, Byrne runs at the mouth a bit and for that reason I haven't followed his particular plight too closely; however, I did read that entire paper and none of main premises are easily refutable.
And then there's this angle...
Thanks, I understood what it meant. Incidentally, maybe you know that Patrick Byrne recently had at least one “victory” in this war of attrition :
December 11, 2008 - Overstock.com Comments on Report of Liquidation of Copper River Partners [David Rocker, Marc Cohodes]
http://news.prnewswire.com/ViewContent.aspx?ACCT=109&STORY=/www/story/12-11-2008/0004940448&EDATE=
I trust Rocker and Co. have exit strategies in place.
I am sure of it.
I also don’t get too much into discussions about it, because it’s unnecessarily aggravating if people don’t argue the facts. I make some exceptions in cases where I think I might have a chance of shedding some light or explaining the real dangers and consequences of capital destruction - with those who might have an open mind to the arguments or those who don’t know or understand but might read the thread for information. I have no illusions and don’t expect to convince SIG.
That’s also why I occasionally bother to post few articles here on the issue, if they are from reputable publications / sources and are armed with facts. Also good to have these for future references for people who may be on the fence or are genuinely interested in the issue and looking for serious factual information and explanation of the issue, not just dismissive arguments.
You’re doing the argument a real service, in that case. I admire your effort.
Thank you, and may the Year of the Ox be kind to you and yours!
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