Replies to post #14107 on GTC Biotherapeutics (fka GTCB)

[DragonBits]

But in LEH defense, they were spiffy dressers and not afraid to make an example of some employees.

Was it really too much to ask? Lehman Brothers CEO Dick Fuld fumed in his office. Was it really too much to ask that, at the end of the worst week of Fuld's 39-year career at Lehman, when the firm he helmed was about to report their first loss since going public, the worst loss in its entire history, was it too much to ask that his employees not dress like freaking used-car salesmen? What were they doing? Dressing for the job they wanted? He — the CEO of the company! — did not let his attention to detail slip. He had continued through all the mess, all the terrible press, to keep up his regular visits to Alexandra to get his eyebrows groomed. But his staff was slipping. He would have to teach them a lesson. Make an example.

On Saturday, Joseph M. Gregory, Lehman’s president and chief operating officer, arrived at the office in an unfashionable green suit. “What are you wearing?” Mr. Fuld bellowed. Mr. Fuld then marched Mr. Gregory from office to office on the 31st floor to show off the outfit.

[jessellivermore]

Once upon a time...

This would indeed be a good analogy if there was a shread of truth in it. Lehman did not go down because the CEO forgot to zip his fly when he was talking with potential buyers. They went down because they got way over leveraged and got into irretrievable debt. Hardly the type of thing likely to entice investors, particularly when they started to ask embarassing guestions like, " Can we take a look at the books ?"

dodah-2 I think you might enjoy "Jack and the beanstock".

JL

[jessellivermore]

Dear dodah...FYI,

Time Magazine: Sept 29, 2008

Lehman's fall shows the downside of using borrowed money...

To compensate for its relatively small size and skinny capital base, Lehman took risks that proved too large. To keep profits growing, Lehman borrowed huge sums relative to its size. Its debts were about 35 times its capital, far higher than its peer groups ratio.. It plunged heavily into real estate ventures that cratered.

Here's how leverage works in reverse. When thing go well as they did until last year, Lehman was immensely profitable.
If you borrow 35 times your capital (nb. if GTC were allowed this they would have over $300 Mil to operate with.)and those investments rise only 1% you have made 35% on you money. If however they move against you as they did with Lehman--a 1%or2% drop in the value of your assets puts your future in doubt.

This is the real story.