Archive for the 'My New Book' Category

Warren Buffett’s ingenious little float.

By Lawrence G. McDonald

It was 1967 when a New Bedford textile corporation in Massachusetts, suddenly upped and purchased National Indemnity, a substantial insurance operation out of Omaha, Nebraska. The textile mill was Berkshire Hathaway, and its owner, Mr. Warren Buffett stumped up $8.6 million, which was a sizeable amount of money in 1967, perhaps close to $100 million.

 At the time, there were financial journals in the USA which considered, quite frankly, that the sage of Omaha may have temporarily lost his grip, any kind of connection between the East coast fabric outfit and the Midwest underwriters being strictly coincidental.

They learned, however, the danger of trying to outthink Mr. Buffett, who as usual ignored them totally,  said nothing and went right ahead with what he believed made sense. He was guided by one star which glimmered above the old New England mill town, casting its cold light on the remnants of another industry which had once died in New Bedford, whaling.

 Because not so far from those ancient jetties, just a couple of streets back from the water, Berkshire Hathaway was eating up cash faster than a whaling fleet in barren seas. Warren needed to pump up that Berkshire cash-flow and he searched for a business which generated money, earned it before it needed to spend.

 Insurance was the answer he arrived at, because those financial institutions collect the premiums, and do not pay out claims for many weeks, maybe months. He was without doubt the first person on earth to understand the concept of ‘float’ – that’s the cash which is sitting in the bank accounts of insurance companies, the capital they may need for a big claim. But it’s still just sitting there, and Warren Buffett decided he could definitely put that cash to work, over 1,400 miles to the east, on the cold shores of Massachusetts where Berkshire Hathaway needed new investment in weaving looms, plant and equipment.

 Warren had no plans to run an insurance company. He just wanted their ‘float,’ just the money. He considered it to be ‘rocket fuel,’ like sending a pipeline into a river of money, which would lift his textile company higher. Not just with its own looms, but to enable it to buy other businesses, newspapers, even a bank, on the back of the cash stream from National Indemnity.

“A Colossal Failure of Common Sense – the Inside Story Of The Collapse Of Lehman Brothers.”

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Conspiracy Against Lehman Brothers?

Letting Lehman Brothers collapse was a huge mistake, according to many people who worked on Wall Street during the economic crisis of 2008. They think it was a conspiracy between Hank Paulson, Geithner, Bernanke and the chiefs at Bank of America and JP Morgan.

But this isn’t really true. It wasn’t a conspiracy to let Lehman Brothers go bankrupt. It was actually a little more personal than that. It was simply a question of two men not really liking each other. Hank Paulson and Dick Fuld had not been friends for a long time. That “huge brand” dinner, April ’08 marked the beginning of the end for Lehman Brothers. Paulson wouldn’t save Dick Fuld. No. He thought Dick should hit a bid and stay out of the Fed window.

But Fuld didn’t. The rest is history, and it’s all in my new book. Every last detail.

A Colossal Failure Of Common Sense

THE eagerly awaited Wall Street blockbuster. Written by a perfect combination of authors. By Lawrence G McDonald, the hard-driving Lehman Brothers trading Vice President, and the #1 New York Times bestselling author Patrick Robinson, the man who wrote Lone Survivor for the Navy SEAL Marcus Luttrell.

Direct from the heart of Lehman Brothers, the bank that smashed the world’s economy. An incredible blow-the-lid-off account of the greed, the misjudgements, the dreadful stupidity of men who should have known better. Revealed by a man who was there, the eyewitness, Larry McDonald. Anyone, laymen or expert, can understand the crucible of a Wall Street trading floor. This is a black box of secrets. And now Larry McDonald rips the lid off.

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The EYEWITNESS Account of Lehman Brothers Published in June!!

It’s called “A Colossal Failure Of Common Sense.” This is THE book on the financial crisis, written by ex-Vice President of Lehman Brothers, Lawrence G. McDonald, and the #1 NYTimes bestselling author, Patrick Robinson. Click on some links below to read all about it. This is the first book written by a senior Wall Street trader in the history of publishing.

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Finally…. a Lehman Brothers Eyewitness writes a book!

This will be the first and ONLY book that describes exactly what really happened inside the walls of 745 7th Avenue – the Lehman Brothers headquarters, written by a former Vice President, with the #1 New York Times bestselling author, Patrick Robinson.

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THE JACKET COPY

They stand alone – the zillion-dollar questions of the financial crisis : What the hell happened at Lehman Brothers? And why was it allowed to fail, with aftershocks that rocked the global economy? In this news-making, often astonishing book, a former Vice-President of Lehman gives us the straight answers – right from-the-belly-of-the-beast. Larry McDonald is the first senior Wall Street trader ever to write such an expose – revealing at last the culture and unspoken rules of the game like no book has ever achieved before.

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A Colossal Failure of Common Sense is couched in the very human story of McDonald’s Horatio Alger-like rise from a Massachusetts “gateway to nowhere” housing project, to the New York headquarters of Lehman Brothers, home to one of the world’s toughest trading floors. He posed as a pizza delivery man to get past receptionists, to score interviews at brokerage firms. He peddled frozen pork chops, door to door, to hone his sales skills, desperate to realize his dream of working on Wall Street.

We get a close-up view of the other participants in the Lehman collapse, those who saw it coming with a helpless, angry certainty. We meet the Brahmins at the top, whose reckless, pedal-to-the-floor addiction to growth finally demolished the nation’s oldest investment bank. The Wall Street we encounter is a ruthless place, where brilliance, arrogance, ambition, greed, and all the human traits, combine in a potent mix that sometimes fuels prosperity, but sometimes destroys it.

McDonald’s gripping story of the firm’s death spiral is a modern-day thriller, studded with incredible revelations.

The collapse of Lehman Brothers was no surprise and didn’t have to happen. In fact, CEO Richard Fuld and President Joe Gregory were confronted with warnings on three occasions — starting as far back as 2005 —that the property market, on which they were betting the ranch, was teetering toward collapse. Fuld and Gregory turned their backs each time.

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McDonald paints a vivid picture of life inside Lehman, where the isolated and reclusive chief executive ‘reigned’ in his sumptuous 31st floor office, accessible only by private elevator. From this Ivory Tower so much of the firm’s brightest talent was driven out of the door. The full significance of the Lehman bankruptcy remains to be measured. But this much is certain: it was a devastating blow to both America and the world beyond. And it need not have happened. This is the story of why it did.

The Authors

LAWRENCE G. McDONALD was, until 2008, vice president of distressed debt and convertible securities trading at Lehman Brothers. He ran an extremely successful joint venture between the firm’s fixed income and equity divisions and was one of Lehman’s most consistently profitable traders, responsible for bringing in over $83 million in trading profits. He was heralded by many colleagues at Lehman for both his early 2006 call on the subprime crisis and the $46 million in trading profits realized from it. Mr. McDonald is also co-founder of Convertbond.com, named by Forbes magazine as “Best of the Web” from 2000-2003, specifically citing it as the web’s premier source for convertible securities information, valuation and news. In October 1999, before the dot-com crash, the site was successfully sold to Morgan Stanley and remains a property of that firm.

PATRICK ROBINSON wrote Lone Survivor for the US Navy SEAL Marcus Luttrell, It was one of the biggest selling military books ever published, 1 on the New York Times bestseller list for months in 2007. Mr. Robinson is also known for his bestselling US Navy-based ‘techno-thrillers’. The autobiography, which he wrote for Admiral Sir Sandy Woodward, One Hunded Days, was an international bestseller. He lives in Ireland, and spends his summers on Cape Cod, Massachusetts, where he and Larry McDonald sail together.

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PRESS RELEASE:– Financial crisis lights fire under publishers

By Michelle Nichols

NEW YORK (Reuters) – The financial crisis is happening so fast that business books about it can be outdated before they hit the shelves. Some U.S. publishers and finance authors are responding by bringing books to market faster.

While it normally takes 9 to 12 months from the time an author turns in a manuscript to when a book is released, that is down to just a few months for some publishers trying to keep up with the 24-hour information age.

One example is “A Colossal Failure of Common Sense,” a financial thriller about the collapse of Lehman Brothers by former vice president Lawrence G. McDonald. Crown will publish it in July, after acquiring the manuscript only last month.

“With something as current as this, unless your timing is right, you can lose your audience for it,” said John Mahaney, executive editor of Crown Business. Crown is a division of Random House, part of Bertelsmann AG BERT.UL.

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Changing events are an added burden for authors. Shari Olefson’s “Foreclosure Nation — Mortgaging the American Dream” was due to be published in October last year, but when the economic meltdown erupted she realized it would be “wrong and outdated.”

“Really the whole book had to be rewritten,” she said. After resubmitting her manuscript at the end of December the book was published late last month by Prometheus Books.

“Writing a book about an ongoing financial crisis is like herding cats, it’s just really challenging,” Olefson said.

Simon & Schuster, part of CBS Corp (CBS.N), is publishing several books related to the financial crisis that it says have been turned around at a faster rate of four to six months.

“Books that are related to any ongoing, shifting crisis are best published as close to when they’re written as possible,” said David Rosenthal, Simon & Schuster executive vice president and publisher.

Among them is “Bold Endeavors: How Our Government Built America, and Why It Must Rebuild Now” by Felix Rohatyn, released in February, just as the U.S. government was considering stimulus plans.

“The financial crisis has led to several instant books,” Popoff said. “The publishers want to be timely and the sooner they can get it out, the closer they can get it to the event happening, the more relevant the book.”

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