Lehman Bros file for bankruptcy - Not a good day for investors

RIP Lehman Brothers Survived the Great Crash of '29, fell fast in the Credit (Banking) Crisis of '07. They were only 158 years old.

There are disturbing parallels to the financial collapse we're seeing right now and the Great Depression. Still not sure if we're repeating the mistakes of the past though. Likely.

Quote:

Hoover further charged that by shaping New York Fed interest rates to facilitate maintaining the British return to gold after 1925, Strong artificially depressed U.S. interest rates at a time the stock speculation fever was getting out of control in 1927, in effect adding fuel to the fire which led to the spectacular 1929 collapse.

Greenspan lowered interest rates and kept them there which inflated the housing bubble. Like all economic bubbles it burst. When it did it spread the chaos to banks. This is only the second year (13th month) of the banking crisis. The banking crisis during the Great Depression lasted about three years before it ended. The Federal Reserve and Treasury are using plays from Hoover's book with their various rescue schemes and it appears we've run out of any "new" or "innovative" solutions that will solve this mess. It'll just have to run it's course.

Lehman Brothers is not going to be the last major institution to be pushing up daisies. Who knows what kind of chaos will be unleashed with AIG imploding. But hey, at least oil is dropping right? Time to party!

Jam it back in, in the dark.

Originally Posted by Shin

your currency is fucked *snip*

Foreign investors would flee with their wealth if that happened. The country would have no means of financing it's budget deficit, trade deficit, and war deficit. I suppose the United States could default or declare bankruptcy, but it's more likely that interest rates would be cranked up in short order. Anybody that is holding any amount of debt is going to get fucked badly. Great news for savers though!

(Probably why the Fed didn't lower interest rates yesterday. No need to toss more fuel on the fire.)

Originally Posted by Shin

The people who worked for the bank on a normal wage are basically fucked, as are the people who relied on those people's money for their own income and it's those people you're laughing at.

It's actually a lot worse then you think. As far as Lehman Brothers goes. Lehman employees received a significant portion of their pay in stock options. Unless they quit or were fired they wern't able to capitalize on them. If they were fired (before the bankruptcy) they were still kinda fucked, because the mass of former employees drove down the price of the stocks, which diluted their money.

Originally Posted by Shin

This is a far bigger story than anything else on the planet at the moment and will have a more significant impact on global economics and national foreign policies than I feel most people realise.

Hah! This is the last thing I would hope for. When/IF the doped up zombies wake up we're gonna be in a world of trouble.

Originally Posted by Zergrinch

I think the fallout won't be as bad as you fear. AIG has been rescued by the Feds, and Barclay's has agreed to buy up some Lehman Bros. operations for a billion pounds.

I do hope that this is the epic failure of subprime and that things will start to get better from here on out. Morgan Stanley and Goldman Sachs better tread carefully

Funny thing about the Great Depression. It wasn't a straight plunge downwards. With every new "rescue" operation the stock market made a sucker bounce which decimated bears while the bulls got slaughtered when the downward cycle started all over again. The stock market never fully recovered in the bounces.... until it hit rock bottom.

This is going to be a really good indicator if we're headed for a global depression or if we're just going to be hammered badly in a recession.

There's nowhere I can't reach.