Monday, April 05, 2010

How long is Ezra Klein's well deserved vacation going to last ? I'm not sure I can stand this.

Michael Konczal wrote

Though Lehman had excellent capital ratios when it failed, half of its assets were very short-term, on the order of one week, and thus were subject to a crisis of confidence in the repo market, a bank run.




Lehman's problem was *not* that they had short term assets. I can't see how that could possibly be a problem.

The problem is that Lehman had massive short term liabilities.

I quote from the post to which he linked

Tier 1 FHC's overall liabilities. As of August 31, 2008, over half of Lehman's $211 billion tri-party repo book had a tenor of less than one week


Konczal wants us to believe he is an expert on finance. Mixing up "assets" and "liabilities" was not a good way to do this.

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