Counterparty Risk...... Lufthansa Edition

I assume we will hear similar stories for month to come...... We all know that the AIG rescue was mainly because they were a major cds unwriter ( see A Question for A.I.G.: Where Did the Cash Go? ).... After the Lehman collapse and the actions taken from the governments i assume the real danger will come from non bank counterparties ( hedge funds, companies ).......

Ich denke das wir ähnlich gelagerte Geschichten demnächst noch öfter zu hören bekommen.... Die starke Stellung von AIG gerade im Hinblick auf CDS im Zusammenhang mit Banken war der eigentlich Grund für die Rettungsaktion ( siehe A Question for A.I.G.: Where Did the Cash Go? ). Ansonsten hätten alleine europäische Banken zweistellige Mrdbeträge verloren. Nach Lehman haben ja alle politischen Vertreter klar gemacht das es keine Bankenpleiten (Versicherungspleiten ?) mehr geben wird und daher ist davon auszugehen das die nächste Welle der "Counterparty" Risiken sicher von Hedge Fonds und Firmen kommen wird die nicht mehr in der Lage sein werden Ihren Verpflichtungen nachzukommen.....


Bloomberg

Lufthansa's fuel-hedging for the remainder of 2008 fell to 72 percent of needs from 85 percent because the Sept. 15 collapse of Lehman Brothers Holdings Inc. liminated some of the contracts, the airline said. The company, which forecasts fuel expenses will rise 38 percent to 5.4 billion euros this year, is 57 percent hedged for 2009 needs. Spending on fuel next year is targeted at 5.6 billion euros, Gemkow said.

The airline, which took a charge of 76 million euros because of Lehman's failure, doesn't plan to build up its hedging position.

Looks Like Lehman Is Running Out Of Rumors......

But it is probably too early to count out Charly Gasparino (?)..... :-) Stock is tanking almost 40 percent....... Time for a small collection of Lehman postings from the past few months ( make sure you also read the links within the posting ) ..... Enjoy.... Congratulations to the "smart money" that bought $6 billion in common & prefered stocks ( at a bargain price of $28.....) just a few weeks ago......

UPDATE : Ahhhh... Just in time our friends from the rating agencies are waking up S&P: Lehman on CreditWatch with Negative Implications I wonder why they havn´t said a thing when Lehman was using "Enron-esque characteristics" for a tansaction to unload toxic assets ( see Lehman Needs to Come Clean About R3) .....

Aktie im freien Fall ( minus 40% ).... Höchste Zeit eine kurze Auswahl an Lehman Posting aus den letzten Monaten herauszukramen ( Ihr solltet es zudem nicht verpassen die Links in den einzelnen Postings ebenfalls mit mehr als nur einem flüchtigen Blick zu würdigen ).... Viel Spaß bei Betrachtung einer der besten "Wall Street Soaps" der letzten Monate...Richtig überraschend ist lediglich das der große Knall so lange hat auf sich warten lassen..... Lehman wird mir fehlen..... :-) Was wohl diejenigen Investoren denken die noch vor wenigen Wochen die 6 Mrd $ Kapitalerhöhung zu $28 gezeichnet haben.....

UPDATE Wie nicht anders zu erwarten reagieren unsere besonderen Freunde von den Ratingagenturen mal wieder mehr als zeitig S&P: Lehman on CreditWatch with Negative Implications ..... Man fragt sich schon wo die zum Beispiel waren als Lehman einen auf Enron gemacht hat um fragwürdige Positionen aus der Bilanz zu tilgen ( siehe Lehman Needs to Come Clean About R3) .......

The Daily Lehman Takeover Rumor....... :-)

I Want My Buyback Back....Lehman Edition

Condo Desperation.....Lehman Offers Money Back Guarantee

Finally the omnipresent Richard Bove ( "the citigroup dividend is safe"......) via FT Alphaville

This is Mr Bove’s forecasting record on Lehman this year: enthusiastic “buy” recommendations between February and April, capitulation in May, before moving to a neutral stance in June.

If the analyst believed it was a buy above $50 six months ago, it must be a screaming buy now the price has fallen 70 per cent.

DOH!!!!!

The Daily Lehman Takeover Rumor....... :-)

Brilliant! The only way to withstand the daily nonsense...... This is at least as credible as all the other stuff that is making waves on a daily basis on bubblevision via Wall Street Finest.... Enjoy!UPDATE: speaking of rumors/nonsense...Lehman Said to Weigh Forming New Company to Buy Mortgage Assets ..Makes you wonder who will finance this vehicle....... Wouldn´t be the first time that they are getting lets call it very "creative"to unload toxic assets ( see Lehman Needs to Come Clean About R3) ......

Genial! Anders ist der tägliche Wahnsinn auch kaum noch zu ertragen..... Leider unterscheiden sich einige Passagen in der Qualität kaum von dem ganzen Schrott der noch immer tagtäglich von Experten und den Medien verbreitet wird...... Hier wird immerhin ausdrücklich auf den Humorgehalt hingewiesen.... Habe aber bei manchen Statement von Bernanke, Paulson, Analysten und Volkswirten noch mehr gelacht..... :-) UPDATE: passend zu dem Hinweis auf den tagtäglichen Wahnsinn Lehman Said to Weigh Forming New Company to Buy Mortgage Assets . Ich glaube zu wissen wer diese Transaktion finanzieren wird.......Wäre ja nicht das erste Mal das Lehman zu mehr als fragwürdigen Methoden greift um ( auf den ersten Blick ....) die Bilanz zu bereinigen ( siehe Lehman Needs to Come Clean About R3 )

Lehman, the Tooth Fairy and the Revenge of the Short-Sellers WSJ Deal Journal
To review: KDB is out. Barclays is looking for an asset-manager, not a whole investment bank. J.P. Morgan Chase is digesting Bear Stearns. It seems the potential terrestrial bidders are bowing out. Is it time to go extraterrestrial? How about the Tooth Fairy?

Well, a satiric email among fund managers suggests just that. The email (reproduced below) actually takes a swipe at many of the prominent names and storylines from the credit crunch

Below, the Tooth Fairy email in its entirety.

Breaking News: Lehman To Be Acquired by Tooth Fairy

The market responded with enthusiasm to reports that the Tooth Fairy has agreed to acquire Lehman. The purchase price has not yet been determined and will be set by Dick Fuld wishing upon a star, clicking his heels three times, and being ransported back to that magical place where Lehman still sells for over $70 per share.

In related news, Lehman has agreed to sell all of its level III capital, including CDOs, ABSs, pet rocks, baseball cards, slightly used condoms, and credit default swaps written by MBIA and Ambac. Lehman’s level III capital will be acquired for 150% of its face value by Tinkerbell, who will carry it off to Neverland to be fed to a crocodile. Lehman is financing 90% of the acquisition at an interest rate that has not been announced; Tinkerbell’s up-front payment consists of a handful of pixie dust, three crickets, and a bullfrog. Analyst Dick Bove estimates that the bullfrog could eventually be transformed into three princes and a pumpkin coach. The deal gives Lehman no recourse to any of Tinkerbell’s assets other than the Level III capital. If Tinkerbell defaults, Lehman’s successor entity will stick its hand down the crocodile’s throat and attempt to get it to regurgitate. The firm’s historical value-at-risk analysis shows that sticking your hand down a crocodile’s throat is completely safe.

Treasury Secretary Hank Paulson issued a statement: “I am delighted that SWFs (Sovereign Wealth Fairies) continue to express confidence in the terrific values represented by American financial institutions. As I have been saying since August of 2007, this shows that the crisis is now over.”

Meanwhile, the SEC has announced an investigation of mean, evil, bad short-seller David Einhorn. While out for a beer with a friend, Einhorn reportedly suggested that the Tooth Fairy does not exist and that wishing upon a star is not a wholly reliable price discovery mechanism. Christopher Cox, chairman of the SEC, said, “Vicious rumors attacking the Tooth Fairy will not be tolerated. Our entire financial system and indeed the American way of life depend on the Tooth Fairy and wishing upon a star. How else could one value level III capital appropriately?” The SEC is reportedly planning to set up re-education camps for short-sellers.

Condo Desperation.....Lehman Offers Money Back Guarantee

Thank god their balance sheet is strong...... :-) . For more insights on Lehman see what Mish has to say Questions Linger Over Lehman's Balance Sheet & April Fool's Offering At Lehman . I also recommend to take a view of the table Level 2 "mark to model" & Level 3 "mark to a hope & a prayer" .

Zum Glück ist deren Bilanz ja bekanntermaßen kerngesund........ :-) Wer mehr zu der "starken" Lehman Bilanz wissen möche wirft am besten einen Blick auf das was Mish zu sagen hat Questions Linger Over Lehman's Balance Sheet & April Fool's Offering At Lehman. Zudem empfehle ich einen kurzen Blick auf die Bilanzpositionen der großen US Banken Level 2 "markt to model" & Level 3 "mark to a hope & a prayer"

Condo Comfort / WSJ
In a move that speaks volumes about the glut in the condominium market, Lehman Brothers Holdings Inc. is promising some luxury-condo buyers their money back after three years of ownership.

The offer applies to some 200 condo units, priced between $480,000 and $2 million, in West Bay Club , a Lehman-owned resort community in Estero, Fla., near Naples on the Gulf of Mexico.

>Add the news via Calculated Risk and it is no wonder some are getting nervous....... Especially when you have a condo to sell in Miami

> Wenn man dann noch diese Daten via Calculated Risk hinzunimmt sollte es wenig verwundern das einige langsam aber sicher extrem nervös werden..... Das gilt besonders dann wenn man ein Condo in Miami verkaufen möchte

The new building comes on top of unprecedented supply....Lenders of all sizes have $42 billion of condominium debt on their books, according to Foresight Analytics. In just three months -- between the third and fourth quarters of last year -- the delinquency rate rose to 10% from 5.9%, says the Oakland, Calif., research firm.

In an effort to jump-start sales in a skittish market, Lehman says that for every buyer until June 1, it will guarantee that the resort will either sell or buy back the residence at the "full cost of the purchase price three years after closing."

> Charts & Stats via Inventory Tracker from my old friend Soldatthetop and his superb blog Paper Money

Naples, FL Condo Statistics

Current Count: 6863 Historical Low: 5547 Historical High: 7768 Average Range: $500,000.00 - $550,000.00 Median Range: $300,000.00 - $325,000.00 Listed Market Cap: $3,759,455,000.00

Statistics for Naples collected between 07-24-2006 and 04-23-2008

The gamble is that prices will recover during that time, and buyers will hold on to their condos.

A spokeswoman for Lehman said no one was available to discuss details of the guarantee program, which appears to exclude 10 penthouse units in two towers.

Jack McCabe, a real-estate consultant in Deerfield Beach, Fla., said other developers desperate to move unsold condo inventory might have to follow Lehman's lead in offering price guarantees as market values continue to slide and thousands more condo units in Florida come on line this year

> In the end it is probably still better to make this kind of creative offer to move inventory than to wait for things to get better........This will put lots of pressure on other players to match this kind of offer...Not good news for players like disaster stocks like WCI :-) It will be interesting to see how they will manage the accounting..... UPDATE: I also recommend to read this from Mish Condo Credit Squeeze

> Im Endeffekt ist diese Art des Marketings wohl immer noch eine der besseren Möglichkieten die Ladenhüter zu vertickern. Darauf zu warten das sich die Zeiten bessern dürfte extrem langwierig werden.... Das dürfte den Druck auf andere Speiler im Condomarkt erheblich verschärfen....Das dürfte dem übelsten Spieler WCI wohl demnächst den endgültigen Todesstoß versetzen. Man darf gespannt sein unter welchen Punkt solch geartete Geschäfte in der Bilanz auftauchen...... UPDATE: Zum Themenkomplex Condo´s sollte man zudem noch mal einen Blick auf Condo Credit Squeeze via Mish richten