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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: Hank who wrote (2520)	8/7/2007 1:08:36 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 6370

Yes it is really scary. Like in 1998, nothing is safe (in this sector). It is as if every tide turned against them and this is already eclipsing LTCM and Amaranth in size. It is indeed alarming that appearently no company has liquidity contingency plans in place. If their house bank pulls the line for whatever reason they are dead on the next day regardless of their assets. Were standard assumptions in risk management in the companies unable to cope with that scenario? Or does it show us (again) how futile risk mitigation strategies are. ... in case of an event they just don't work. Or, is it just a realisation of losses which have been hanging over the market like a black cloud. Margin calls aren't issued without a reason. LUM is even more surprising as they reconfirmed their dividend in the light of the AHM debacle; yet they evidently weren't able borrow even this minuscule amount. Profitable but no cash flows? Anyways it means too much leverage is in the system which needs to be unwound - and this unwinding is no longer an orderly deleverage but causes a lot of collateral damage. This is not the soft landing some people had in their minds.