Losing your head over it!

Losing your head over it In the Bible John the Baptist- He wasn’t a Baptist anymore than a good Muslim who is water boarded by the American Government becomes through that ancient sometimes deadly if the head is held down too long-procedure- A Baptist….it is just an name to distinguish him from another John in the bible. … John the Baptist literally lost his head- it being cut off his body IS style- for talking publicly about inconvenient truth. Jesus claims that His True Apostles are known for doing that- (Matthew 10) so I guess judging by how useless The Church is these days the Apostles must have died out some time ago…. And so St Paul was killed in Rome. St Peter crucified upside down and Jesus right way up but they both died regardless and all this for speaking out and upsetting the authroties! So I do admire the next person we will read about- and while he may not be a Christian- he could in time prove to be a brother especially if he deals in truth! ‘In Mid May David Einhorn had a speech to write. Einhorn, a hedge fund manager controlling 6 billion of assets was preparing to speak at the Ira W. Sohn Investment Research Conference where each year a thousand or so people would pay as much as $3,250 to hear prominent investors tout or trash stocks…..their entrance fee going to a good fund- The Tomorrows Children Fund…. Greenlight was known for its patient, cerebral approach to investing; (Einhorn said) “We start by asking why a security is likely to be miss valued in the market, once we have theory we analyze the security to determine if it is in fact cheap or overvalued. In order to invest we need to understand why the opportunity exists..”…. Einhorn called in the seven analysts who worked for him to assign a special project. “We’re going to do something we don’t usually do research wise “ Instead of painstakingly investigation of an individual company or particular idea, they were going to conduct over the weekend August 11/12 2007 – a crash investigation of financial companies that has subprime exposure. He knew that this was where the problem had started, but what concerned him now was trying to understand where it might end. Any banks that held investments in falling real estate values (Note: Those who have studied the 20th Century may have been aware of appalling problems corruption and so on which appears to have had little lasting effect or damage to Business or the community as a whole- the reason is that with in many parts of the world and the economy growth doubling and doubling again the evidence of the mistake, corruption, disaster can be quickly built over… Here the problem comes when there is decline and falling values- And some suggest that the whole of this 21st Century will be about declining population, growth, resources and so on… Making mistakes very serious events-Ed) –which had likely been packaged up neatly as part of securitized products that he suspected some firms didn’t even know that they owned- could be in danger. The project was code named ‘The Credit Basket’. By Sunday night the team had come up with a list of twenty five companies for Greenlight to sell short, including Lehman Brothers… where they already held a short position on the hunch that their share price at $64:80 per share was too high…. As the banks reported their quarterly results in September Einhorn paid close attention concerned by some of the things he was hearing in Lehman’s Sept 18 conference call… ‘This is crazy accounting. I don’t know why they put it in” Einhorn said “It means that the day before they go bankrupt is the most profitable day in the history of the company, because you’ll say all the debt was worthless . You then get to call it revenue. And literally they pay bonuses of this, which drives me nuts”. Six months later ? Einhorn listened intently to Lehman’s earnings call on March 18 2008 and was baffled to hear Erin Callan offering an equally confident prognosis…. He suspected that Callan was in over her head- or the firm was exaggerating its figures… (Speaking at the Conference he) recounted how he listened intently to Callan’s performance during her now famous earnings call the day after the Bear Stearns’s fire sale. “On the conference call that day. Lehman Chief Financial Officer Erin Callan used the word ‘great’ fourteen times (And my Editor tells me that I haven’t used it much and should do) ‘challenging’ six times; ‘strong’ twenty four times and tough- once. She used the word ‘incredible’ eight times he noted but I would use the word incredible in a different way to describe the report”…. With a projection screen displaying the relevant figures behind him he told how he had questioned Callan about the fact that Lehman had taken only a $200 million write down on a $6.5 billion worth of especially toxic asset known as collateralized debt obligations CDO’s even though the pool included $1.6 billion of instruments that were below investment grade. “Ms Callan said she understood my point and would get back to me and in a follow up email Ms Callan declined to provide and explanation of the modest write down and instead stated that based on current price action Lehman could expect to recognize further loses in the second quarter…. Clearing his throat audibly Einhorn ended his speech with a warning. “My hope is that Mr Cox –SEC and Mr Bernanke Fed Reserve and Mr Paulson Treasury Sec will pay heed to the risks of the financial system that Lehman is creating and that they will guide Lehman towards recapitalization and recognition of losses – hopefully before taxpayer assistance is required”… Within minutes of Einhorn leaving stage, news of the speech had been broadcast throughout the financial circles. Lehman was in for some serious pain when the market opened…the shares would fall as much as 5 percent. P101-108 Too Big to Fail A.R.Sorkin 2009.