Lehman Had "Absolutely No Idea” How Big Its Derivative Book Was In Days Following Bankruptcy

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Mon, 08/30/2010 - 13:53 | 553261 Boilermaker
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Do they know now?

Mon, 08/30/2010 - 14:30 | 553354 walküre
walküre's picture

Valid question and my very first thought.

But rest assured all is well in the age of post Lehman "stress tests".

Keep buying the dips. Today is a grand opportunity to buy cheap. /sarc

Mon, 08/30/2010 - 14:49 | 553390 BGO
BGO's picture

This problem isnt unique to Lehman's or the derivatives markets. Fifteen years ago, I used to watch bond traders wrecklessly buy and sell hand over fist when they had no idea what their positions were. It was very common. Not at all surprising the same practice would get (much) worse over time.

Mon, 08/30/2010 - 14:55 | 553397 walküre
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like any other industry, I would be 100% certain that the competition is not far behind...

there is no "edge" in this industry, just who-knows-who and political leverage which was the real LEH problem.

Mon, 08/30/2010 - 15:00 | 553412 Boilermaker
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It's kind of like watch someone at a roulette table toss $1 chips all over the table at random where even if they win they actually lose.  I always watch in amazement at the utter lack of any thought as they just start covering numbers.  Of course, it's normally someone that has NO business gambling at all...whereas these guys are college educated...but...

Mon, 08/30/2010 - 13:55 | 553264 centerline
centerline's picture

Plausibe deniability.

Mon, 08/30/2010 - 13:55 | 553266 firstdivision
firstdivision's picture

Lehman have irrational exuberance....never.

Mon, 08/30/2010 - 13:57 | 553270 Gromit
Gromit's picture

What do they care?

If cash on hand is insufficient to pay bonuses, what does it matter what the net position is?

Mon, 08/30/2010 - 14:04 | 553287 sweet ebony diamond
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Client accounts have cash. Bonus Time!

Mon, 08/30/2010 - 13:57 | 553271 Mongo
Mongo's picture

pickaboo accounting bitchez!

Mon, 08/30/2010 - 14:01 | 553278 godfader
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That's why Hussman keeps saying: The chaotic way of letting Lehman fail in an completely uncontrolled way was a recipe for disaster. The point is not that Lehman should not have been allowed to fail, the problem is the chaotic way.

Liquidators had no idea how to access IT systems, they didn't know what positions they had on, it was a complete crash'n burn.

Hank Paulson fu**ed this one up, big time. We're still payign the price his incompetence today.

Mon, 08/30/2010 - 14:42 | 553381 Ripped Chunk
Ripped Chunk's picture

Hank needs to live out his remaining days in a pain amplifier.

Mon, 08/30/2010 - 14:04 | 553289 MountainMan
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Nation falling apart at the seams...meanwhile...


Roger Clemens arrives in court for arraignment
Mon, 08/30/2010 - 14:18 | 553330 John McCloy
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  I am just going to say something here. I turn on CNBC early this morning and they spend five minutes discussing Roger Clemens and they are throwing around the word perjury and I  had a moment of anger I almost turned into the Hulk. Why are we spending tax dollars and effort to even attempt to prosecute this sideshow?

The timing on this is nothing more than a headline for the consumption of the blue collars hoping to distract them from our economic problems and the President's record low approval ratings with elections 2 months away. May we should concern ourselves with Clemens perjury after looking into every pol, banker and regulator complicit in indebting our generation and our future generations are facing arraigment. We are a nation without justice at this point.

Mon, 08/30/2010 - 14:31 | 553355 Rick64
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Mon, 08/30/2010 - 14:33 | 553361 walküre
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...Glenn Beck and Sarah Palin at the DC Mall calling for structural change in America.

Look over here! Consumer spending is up, up and away!!!

Death throws. Feels a lot like the Sixties but from the opposite angle.

Mon, 08/30/2010 - 14:34 | 553362 aheady
aheady's picture

I think the blue collars see right through it at this point as well.  But I could be wrong.

Mon, 08/30/2010 - 14:40 | 553377 VegasBD
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You are. All my friends n family could be described as blue collar to upper middle class. They could care less and are more concerned with the season getting started and Brett Favre's TD to INT ratio.

Mon, 08/30/2010 - 14:52 | 553392 aheady
aheady's picture

Yeah, that was way too optimistic (wishful thinking?).  I get blank stares when I ask people if they know who Ben Bernanke is and glazed eyes when I try to explain... Mindboggling.

Mon, 08/30/2010 - 23:20 | 554383 Hang The Fed
Hang The Fed's picture

My collar is about as blue as it comes, and I could give a flying fuck less about prosecuting a baseball player for perjury.  I would rather see five minutes of a group of orphans lining up to punch Bernanke in his beanbag than listen to the hours and hours of this fucking sideshow.

Mon, 08/30/2010 - 14:35 | 553365 Clayton Bigsby
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I was thinkin the same thing when they were having all those guys testify in front of congress in the first place.  I mean, really?  This is what our fucking tax dollars are going to?  Somebody ougtta plant a dirty bomb up clemens ass and fix this whole "congress" problem once and for all.

Mon, 08/30/2010 - 14:37 | 553371 Clayton Bigsby
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PS  Hi, NSA/CIA/FBI et al..  Please note that my post in no way, shape, or form represents intent for criminal misconduct jeopardizing national security...

Mon, 08/30/2010 - 14:39 | 553375 Boilermaker
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What about re-trying Blago in Illinois?  Several more million in the shitter?

Mon, 08/30/2010 - 15:29 | 553489 Ignatius J Reilly
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Congress must maintain the illusion of control/power.

Mon, 08/30/2010 - 14:05 | 553292 tony bonn
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and wasn't sarbanes oxley supposed to deliver once and for all from financial chicanery, fraud, and malfeasance....looks like another piece of fascist legislation gone up in smoke.

Mon, 08/30/2010 - 14:16 | 553322 crosey
crosey's picture

Nah...SOX was just supposed to look good and spend a ton of money.

Mon, 08/30/2010 - 14:07 | 553295 carbonmutant
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The US government doesn't either...

Mon, 08/30/2010 - 14:09 | 553298 LoneStarHog
LoneStarHog's picture

Who cares in The New Normal!

If you don't own it, sell it short.

If you buy it, don't worry about funny things like FTD.

Just buy, buy, buy and records be damned.

Mon, 08/30/2010 - 14:09 | 553299 Stepney
Stepney's picture

I used to be angry at Lehman's for rejecting me for a role writing automated trading systems for them sometime around 2000.


Now I am thankful that they did!

Mon, 08/30/2010 - 14:37 | 553370 Hephasteus
Hephasteus's picture

Hopefully you got a chance to help out with the let's make computers call everyone and annoy the crap out of them during the late 80's and early 90's.

Mon, 08/30/2010 - 14:09 | 553300 Dental Floss Tycoon
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How much did Barclays takeover influence the decision to let Lehman go bankrupt?

Mon, 08/30/2010 - 17:26 | 553754 MichaelG
MichaelG's picture

Barclays tried to buy before the bankruptcy filing, but weren't able to as the quick sale would have broken UK law requiring (Barclays) shareholder approval. (Oddly quaint idea, obeying the law, I know.)

Mon, 08/30/2010 - 14:12 | 553308 paver
paver's picture

Didn't the law require that someone certify the adequacy of the systems/controls?

Mon, 08/30/2010 - 14:14 | 553314 williambanzai7
williambanzai7's picture

Laws? What laws!

Mon, 08/30/2010 - 14:19 | 553331 Voodoo-economist
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sox 404

Mon, 08/30/2010 - 14:17 | 553326 Boilermaker
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10,000 comedians are out of work and you are cracking jokes?  SHAME!

Mon, 08/30/2010 - 14:13 | 553311 Missing_Link
Missing_Link's picture

Wall Street  ...  What a bunch of freaking rocket scientists.

Mon, 08/30/2010 - 14:14 | 553315 Getagrip
Getagrip's picture

Would someone just take this dysfunctional system out and shoot it-put it out of our misery.

Mon, 08/30/2010 - 14:15 | 553316 Shameful
Shameful's picture

I wish I had enough assets or assets under control that I can't be concerned about record keeping even when billions are involved.  You know what they say, a billion here, a billion there, and soon we are talking about real money.

Mon, 08/30/2010 - 14:16 | 553323 Internet Tough Guy
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They probably had already fired the people that knew.

Mon, 08/30/2010 - 14:23 | 553340 VWbug
VWbug's picture

the people that knew were long gone before the SHTF

Mon, 08/30/2010 - 14:21 | 553337 Miles Kendig
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Pay for performance hits new highs.

Mon, 08/30/2010 - 14:30 | 553353 Boilermaker
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Once again, irrelevant, as the phantom rally commences directly at 2:30 pm.

Facts are useless.  Welcome to ThunderDome.

Mon, 08/30/2010 - 14:36 | 553369 sethco
sethco's picture

not sure they pull it off today. mitigating the slide may be the goal.

Mon, 08/30/2010 - 14:46 | 553385 walküre
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Friday was a preview of a bond "flash" crash.

In an instant bonds were liquidated and billions flowed into equities.

That's why bond rates and equities surged at the same time.

It will never get investigated and it would be very simple to do.

Just check for charts (not the technical kind) on Bill Gross' underpants from last Friday. That guy must have had a very sudden bowel movement.

Death throws. The market is in cardiac arrest and all the reanimation won't work.

Mon, 08/30/2010 - 14:47 | 553387 Boilermaker
Boilermaker's picture

Nah, they'll get-er-done.  It'll be some epic shove upward on a very small timeframe, as usual.  Volume is pathetic so this is a gimme.  But, then again, I'm not very good at calling the action...same as anyone else.

Mon, 08/30/2010 - 14:58 | 553401 walküre
walküre's picture

lower highs... check

lower lows... working on it. bots need to be reprogrammed to stop buying at S&P 1040.

Mon, 08/30/2010 - 15:01 | 553416 Boilermaker
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I'm still guessing there will be a sudden, violent, and inexplicable shove upward before close....could be wrong though.

Mon, 08/30/2010 - 15:10 | 553436 walküre
walküre's picture

on the other hand.. low volume decline is a new trend. what's up with that?

Mon, 08/30/2010 - 14:33 | 553360 Rick64
Rick64's picture

Does anyone really expect these people to tell the truth especially when its not in their interest? Integrity and honesty aren't in their vocabulary.

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