Apple Truthiness Flowchart

Did Apple block the Google Voice app for the iPhone? Apple is not sure. More...

米大統領「過去の嵐が収まりつつある」

日テレNEWS24

This week I appeared on NTV Japan to talk about the President's speech to Wall Street. More...

One Year Ago - Tuesday September 16th, 2008 3pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: Lehman employees celebrate]

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Hollywood Ending!

Originally written Tuesday September 16th, 2008,3pm

Sweet Jesus, what a roller coaster ride!

At 2:21 we all get an email saying "come to 2, there will be an announcement." Well the only way to get to 2, where the entire floor is a vast open space for trading, is to go to the lobby and then wait for the elevator to take you up one floor. So there's a massive traffic jam and I arrive just in time to hear Bob Diamond, the American who runs Barclays Capital, announce "Welcome to Barclays!" I don't know any details but I'm sure a lot of people who were in that room will still see pink slips in the next month or two. But the WSJ and others are reporting this action saves about 10,000 US jobs. Hooray! .

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One Year Ago - September 15th, 2008 10:50pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: Lehman stock hits 25 cents]
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A White Knight?
Originally written Monday September 15th, 2008,10:30pm

The Wall Street Journal is reporting that a deal for Barclay's to buy most of Lehman's US operations could be announced shortly. The deal would preserve a lot of jobs, help New York City, and throw the rest of Lehman proper (including overseas operations) into immediate liquidation.The question of what to do with the $85 billion of toxic mortgage assets would still loom, but I think the Fed's new rules allowing banks to put up a wider set of assets as collateral to ensure overnight liquidity could conceivably do the trick and would be unlikely to be played in the press as a "bailout of Lehman by the Feds." It will be more like "Brits to the rescue. Elegant solution to a lot of problems and it saves face for the Feds.Still unclear how "real" this is or whether it would be approved by the judge in charge of the chapter 11 filings. For Barclay's, it’s a huge bargain if they contain the mortgage risk to acceptable levels. It means that the top people at Lehman who've been negotiating up until this point are history, I assume. Stay tuned More...

One Year Ago - September 15th, 2008 7:30pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: "Lehman Brothers" stripped from a podium]

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Tales From the Crypt II

Originally written Monday September 15th, 2008, 7:30pm

So here we are after a day of controlled turmoil in the markets and what is certainly a difficult period ahead. Thankfully things have been orderly but to my mind the real test comes if Lehman has to fire sale some of the mortgage assets it has that every other bank has but have not been able to place a value upon because these are assets that are frozen because no one really knows what they are worth.When I left Lehman at 4pm it was clear that pink slips had been issued to whole departments and divisions - but not ours (yet). The Crypt is full of rumors that Barclay's is interested again and even B of A is exploring some complicated three-way deal involving the best of Merrill and the best of Lehman, but nothing may come of this.I expect that I will quickly learn whether I have some sort of job and, more importantly, whether my contract will be honored. I'm "fine" in the worst case (i.e., unemployed and uninsured by Wednesday) but very fortunate in the latter case. As I read the internal announcements, the latter is not out of the question and the former seems quite harsh (I think there's some sort of severance even for new employees). It all depends on how quickly a deal can be signed and to what extent key people have already got offers. I got many headhunters calling today, but they are trolling for experienced research analysts and I am not that. On the plus side there appears to be demand for my experience and not many "me's" are going to be laid off from Lehman since I'm not a Wall Streeter, really.Plus I can collect unemployment for up to six months - about $1800/month it turns out - which seems pretty decent all things considered.I got an official email asking me to report to work tomorrow at 8 for business as usual. And that's what I'll be doing. I suspect the media will have moved on. :)

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One Year Ago - September 15th, 2008 2pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: Reporter outside the crypt]
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Tales From the Crypt
Originally written Monday September 15th, 2008, 2pm

I've been in and out of the building three times this morning and on the second time one of the reporters spotted my name tag and started shouting out my name "Alan! Alan! Any comment?" I ignored him. When I came out about 30 minutes later, however, the SAME guy spotted me and began yelling "Alan! Alan! Over here!" and in 3 seconds 40 reporters with cameras and microphones were following me down 7th Avenue yelling "Alan! Alan!" Then all these tourists spotted them following me so they started following me and snapping pictures and babbling in Italian. I sort of enjoyed it. It was very difficult not to respond but no good can come of it and I look like I haven't slept much for some reason. :) So, the official line is we are open for business and fully cooperating to ensure as orderly a wind-down process as possible. There is clearly interest from different parties in buying the equities business, where I work, but it is a shrinking asset. We have about 100 clients who matter and we're holding their hands very closely and doing anything they want right now (plus none of them wants chaos, either). This is something we can probably do for 2-3 days max before they say enough is enough and our franchise is worth nothing. Dick Fuld seems to have overplayed his hand and we now see that the Fed has in fact created a MUCH huger moral hazard with all its actions last night, but the headline "Lehman declares bankruptcy" is a very good one for investors and the US economy in general and a coup for the Feds. I hope this action plus the purchase of Merrill are enough to stop all the madness. Capitalism requires pain, and the pain is never evenly distributed. I've always argued that it's tough luck for midwestern factory workers whose jobs move to China forever as long as we give them a safety net of unemployment insurance, social security etc so I'm getting a taste of my own medicine and that's fine. I would be surprised if there is a buyer (there are lots of rumors) although it's amazing who comes out of the woodwork when a company that cost $2.5 billion on Friday is worth $160 million today. A week ago - at my debut - it was worth $9.7 billion. The day I started, May 12, it was worth $31 billion. A year ago it was worth $47 billion. Now, I have friends who could buy it, fer chrissakes! :) The biggest threat to the economy now is what happens when the bankruptcy turns from a Chapter 11 to the Chapter 7 version if Lehman cannot sell any of the good parts in the next few days. Chapter 7 could force them to sell the mortgage-backed assets at probably a few cents on the dollar. If that happens, every other financial institution in America will have to use that price to set a value on the similar assets they all hold. This will create a paper loss for the entire sector in the hundreds of billions of dollars - and a dramatic contraction in the money supply etc. It could be 1933 all over again. I am certain the Feds are looking at options where they take over Lehman's bad assets rather than let them be sold openly. It won't generate the headlines that "bailing out" Lehman would have. The mood? People are crying, hugging etc. I am awkward because the team I joined has been together for 7 years and many of them have worked together far longer (like 19 years). Plus most of them were wiped out financially. Most have small children. So I'm there but not "there." Very sad. More later. More...

One Year Ago - September 15th, 2008 1:30am

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: Potrait of Dick Fuld, Lehman's CEO]


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Last Lehman - For Tonight
Originally written Monday September 15th, 2008, 1:30am (Sunday Night)

I just got home from Lehman HQ which is a combination of an office building being sacked by employees grabbing as much as they can carry coupled with a media circus. I have photos I'll post when relevant and safe to do so. Lehman is filing for Chapter 11 bankruptcy and we have officially been told that tomorrow we work business as usual. I think they want to see whether Lehman is too big to fail or not and go from there. A lot of clients have reduced their exposure to Lehman already and may stick around only to prevent an outright complete collapse or to force the Fed's hand. I think once the Fed made a much larger credit facility available to investment banks late Sunday night, Lehman decided to go for this unexpected Hail Mary. Small chance of preserving Lehman, coupled with greater chance of financial turmoil. I thought it was illegal for a brokerage like Lehman to file under anything but Chapter 7, so this fact alone is interesting (they are saying the holding company can file under Chapter 11 - which lets you stay in business and re-organize - because it is technically not a brokerage, it's an owner of brokerages. The saga continues. The animal has been backed into the corner and has nothing to lose. It's hungry, and angry, and tired, and a risk-taker by nature (the firm is run by people who came up through bond trading). It may behave quite irrationally and without concern for many millions of truly innocent bystanders who might be harmed by a general financial meltdown we haven't seen since 1930. Tomorrow will be spectacular. Stop by 745 7th Ave and get a picture. addendum: just got a internal memo saying Lehman fully intends to stay in business and will meet employee benefits obligations and payroll this Friday. Sounds like hardball.. More...

One Year Ago - September 14th, 2008 7:30pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later. [Photo: Reporter outside Lehman HQ]
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No News Except for What You Can Read for Yourself if You Are Interested
Originally written Sunday September 14th, 2008, 7:30

Just finished the call, which was infiltrated by third parties. They said literally nothing.

I think neither "side" is blinking.

One side believes that Lehman can fail without disrupting the wider marketplace and the other believes that either it can remain as a going concern long enough to pull off a miracle or that the Fed will blink in some way that doesn't look like a bailout. In the meantime watch proxies for both sides either say everything will be fine or the sky is falling. Bill Gross, one of the nation's richest men but someone with a lot to lose if Lehman fails, is screaming at anyone who will listen that tomorrow "we are facing a financial tsunami." Others are more sanguine. Tomorrow will be historic. Lehman must file bankruptcy by 11:59pm tonight (I think Central time because a lot of the contracts they need to cover are traded in Chicago) but tonight anyway. The end will probably come quickly. Everybody has an interest in an orderly liquidation of Lehman except for those who have nothing more to lose and the vast majority of those people are good enough to play along, I think. More...

One Year Ago - September 14th, 2008 5:12pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I have been publishing those observations here one year later.

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Firm-wide Conference Call at 5:30pm
Originally posted Sunday September 14th, 2008, 5:12pm More...

On Year Ago - September 14, 2008 5pm

This time last year I was an equity analyst at Lehman Brothers. As the firm collapsed, I sent a series of notes to my friends and family with my take on the situation. To coincide with the anniversary, I am publishing them here over the next few days. [Photo: Lehman emergency evacuation kit]



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Lehman News - Bank of America Withdraws From Negotiations
Originally written Sunday September 14th, 2008, 5pm

I'll probably be sending out a lot of these updates so you can wait til the end if you'd like and just delete the rest. Writing out what I think this means as it develops is helping keep me sane for the moment. I'm actually fairly excited and not so worried - at least yet. I just came from the office there are some people gathering their personal stuff in case there's, like, a lockout tomorrow. Plus I was curious to see if there were good photos to be taken (there weren't) So what does this latest development mean? B of A is reputedly in negotiations to acquire Merrill Lynch, which would be the next bank to fail if Lehman fails. This puts added pressure on the Fed, I think, to intervene or for a cabinet level decision to be made tonight to let Lehman enter Chapter 7 bankruptcy in the morning, watch what happens, and go from there. The worst case scenario is that the Dow falls so much that trading is halted and the Fed then intervenes. On the other hand, Chapter 7 bankruptcy just might happen smoothly - who knows? From the Fed's perspective that might be a very good outcome. In the meantime now everyone on the Street is NOW focussed on the Lehman-is-finished-how-do-we-limit-the-damage scenario, which I honestly think very few people put good odds on until this afternoon. In that event Merrill would be looking for a buyer desperately and B of A would have an inside track, which should keep Merrill from being subject to speculative attacks the way Lehman was. In fact, B of A could combine a few parts Lehman with a few parts Merrill together and build something new very cheaply. Or hire 50% of Lehman's now-unemployed junior people in successful areas like Equities. Smart strategic move by them. Outcome for me is probably that my contract gets paid, but it may be months in coming, which would be fine. I'd rather be working while looking for another job but you deal with the hand you are given and I can always demand a more generous allowance from Drew, right? :) I have heard NOTHING from Lehman management since this morning's "we know nothing." I think they are waiting to see if there's any White Knight from any direction before declaring Chapter 7. The European regulators might still panic and guarantee a Barclay's bid or something like that. Might. More...