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Me, wrong! Perish the thought :)

That is probably the most professional way I have ever seen anybody disagree with me on a blog. Kudos. You should give lessons in communication. I think you misconstrue some of my statements, though.

A) It should be obvious by now simple saying our liquidity positions are fine is not good enough. This lesson is unequivocally laid bare in the monoline scenario. They consistently tout the virility of thier portfolio and financial positions while short sellers make money and the market prices them as deep junk. All they had to do to keep Ackman quite and cause me to reverse my position was to show how they were financially sound, not tell us how they were financially sound. Lay open your portfolio and detail its performance. They chose not to do this (and I admit that there are a few choice reasons why one would refuse), but in doing so they are condemned to the guesswork of the pundits, and even more importantly lose credibility in the marketplace. Lehman has an army of analysts, and it would not be a strain to prepare a detailed, yet concise white paper on their liquidity position that points out exactly how they're protected. Just saying "we're fine" brings to mind Ambac, MBIA, Hovnanian, and most recently Schwartz's Bear Stearns. That is not good company to be keeping if you are interested in your net worth.

B)I understand, perfectly, the point about trying to call unfounded rumors unfounded but to blame the drop of the stock on short selling rumors without applying the same logic to the unprecedented pop in the stock is disingenuous. Of the stock drops 10% its a short seller conspiracy, but if it pops 15% its due to ?????. Of course there are rumors and speculation floating around concerning Lehman, and I am sure a few short sellers may have whispered in someone's ear, BUT the opposite happens more often, much more often. Wall Street is famous for the pump and dump - that's where the term came from. There seems to be much less complaint about the rumors that drive the stock up than those that drive the stock down. Does the populace lose more money with the short rumors than with the long rumors, whether started for economic gain or not? Is one worse than the other? If either is unsubstantiated, they are just as wrong and I am quite sure that someone, somewhere at some time started a rumor for economic gain that had to do with a stock going up.

C) Isn't the ex-CEO of TYCO in jail now for fraud? Bad example ;D but I get your point.

D) It is not just about the stock just going down on rumors. It is the stock going down often on rumors, then popping back up (on rumors?), then back down again (on rumors?). This increases the [url=http://en.wikipedia.org/wiki/Beta_coefficient]beta[/url] of their stock, leading to an increased expected [url=http://en.wikipedia.org/wiki/Risk_premium]risk premium[/url], which in turn increases the cost of their equity capital and perceived equity risk (defined as downside deviation from expected return on this blog, by this author who is not a math geek so excuse him if he's wrong) ;D. You see, this popping up and down of the stock essentially makes it riskier stock. The rumors also expose a significant chink in the US I banking model. I banks take a relatively small amount of equity, lever it 25 to 35 times, and buy and sell things that few understand (including the I banks themselves). They offer services, many based solely on the publics belief that they know what they are doing. Products and service business models offered by I banks using 97 LTV loans based on the perception of superior knowledge or skill are quite susceptible to confidence levels, and are not nearly as sturdy as say Manufacturer X that makes widgets that can be touched and tested and physically compared. This allows I banks to generate considerable profit margins as compared to the widget company, but exposes them to unique and considerable risks as well. Lehman and Bear Stearns are sterling examples of these risks. Basically, many banks value, like beauty itself, is in the eye of the beholder.

I have more to say, but my baby daughter is demanding my attention...