Lehman Brothers

[500E]

Hope no one here was affected.

So, a top investment bank gone...What has the credit crunch come to?

Bank of America saving Merryl Lynch from a similar situation with 50bn input.

Opinions?

 

[nick mercedes]

Hope no one here was affected.

So, a top investment bank gone...What has the credit crunch come to?

Bank of America saving Merryl Lynch from a similar situation with 50bn input.

Opinions?

AIG next?

 

[Gucci]

I think the whole culture of living beyond our means is coming home to roost. I hope this correction only goes so far without affecting 'regular' households/mortgage holders. Why should we all shoulder the pain of bad debt and greedy credit?

 

[verytalldave]

The thing is, all of these aren't really "banks" per se. They are only investment houses and gamble with other peoples money.
Its all down to giving unsuitable people too much credit without sufficient guarantees that the loan can be repaid. its really nothing more than greed of these investment houses hoping to make a killing and then it all turning round and biting them back big time. They will not be the last.
Out of the gloom comes a ray of hope. Price Waterhouse stand to make megabucks sweeping up.

 

[e55]

I feel sorry for the support staff at the company who lost there job today.
When going pass on the DLR after work today you could see the building was empty and none of the lights were on.

Its sad that such a huge bank has gone under but the only people to blame are the greedy bankers offloading re packaged debt that clearly wasnt as good as it was rated to make a quick profit.

I just hope I still have a job by the end of the year

 

[carnut]

I think the whole culture of living beyond our means is coming home to roost. I hope this correction only goes so far without affecting 'regular' households/mortgage holders. Why should we all shoulder the pain of bad debt and greedy credit?

Im afraid it already has!

Your credit cost
your bank
your investments = pension

dont think you arent effected

 

[Mudster]

This situation is at least 5 years overdue, the last 5 years we've been living on borrowed time as the poor "Investment" decisions have spiraled beyond control.

Financially, this is catastrophic, we haven't seen the worst of it yet, this will be the single biggest financial event since the Wall Street Crash at the end of the 20's.

Lehman Brothers are just the start of the big fallers. As all the institutions now hurredly try and search through their positions to find out exactly who they have leant to or borrowed from.

The irony is, many of them simply don't know the answers to this, the debts have been repackaged so many times that it resembles the insurance and reinsurance spirals that nearly lead to the downfall of the Lloyds of London at the end of the 80's early 90's.

Whatever way you look at it, it's bad news everywhere, these investment banks feed the banks that your bank/mortgage lender borrows from......that's how it effects you.

Your mortgage is tied to these investments or the stockmarket or a combination of these things, expect them to underperform for the next 5 years minimum.

I'm in buisness, I'm not thinking about profit or directors dividends, I'm thinking about long term surival, anything not required or surpluss is being discarded. All finances are being tightened.

How does effect me? I run my business on stock finance, this product was simply stopped, not just to me, but to all my competitors also. It's a high risk product (which is why It cost 4% a month) and was one of the first to be withdrawn from the market. Effectively my bank withdraw my ability to buy stock and trade so we had to refinance ourselves.

I'm losing customers hand over fist, fortunately (for me) I'm also losing competitors hand over fist, so I'm picking up what I've lost to fill the gaps.

Small businesses like mine are being hung out on the shelf to dry...Unlike the likes of Nothern Rock or Lehmans I wouldn't just walk away and get to keep my London Pad....Country pad flash cars etc....I'd get asset strpped and thrown out on the street.

The buck stops with you and me, someone somewhere picks up the pieces, that's usually the guy at the end of the line, the last person in the creditors list...the staff, the employees, the ordinary guy in the street.

The overwhelming issue though was highlighted quite well in the news this eveing.

People assumed that someone like Lehman Bros, were so large, their capitalisation so much and their investments so wide reaching that they wouldn't be "allowed" to file for Bankruptcy.......The fact they have means no one is safe, that single fact has more of an effect than any other singlefinancial event recently.

 

[The G.F.P]

on anothe rforum we were discussing how this will affect the yanks who own manc utd & liverpool & derby & villa

im sure i just herd that 30,000 traders could loose their jobs

its times like this that im glad ive got enough money saved to live for a year or 2 as in the past ive been so tempted to buy a new car with it

 

[Mudster]

I'm glad I have a diddy mortgage and didn't get tempted to strap myself up. (mortgage is 15% of my income)

I have a friend with a £400,000 mortgage, intelligent guy with a wife and three kids. Sadly he has no hope of holding onto his house without help from his family.

 

[whizzkid11]

Lehman Bros was in the pipeline to happen for a while - when the US government intervened to help the like of Fannie Mae and Freddie Mac, and Bear Sterns being swallowed up by JP Morgan - there were rumours that there was fourth banks on its way down as well.

The US Government would have stepped in to help them, but they had to make a stand and and not set a precedent for saving everybody.

Couple that with the comments from the governor of the second largest bank in the world that banks "GREED HAS GOT THE BETTER OF THIER JUDGEMENTS" - shows that its a case of making your own personal millions - without regard for what happens to where they come from!

The people who made the decisions when the were made, are no doubt unaffected personally by what is happening now - they all made their commissions and have them stashed away - so this period wont affect the way they shopping - no need to look at too many price tags when shopping.

In fact they are probably reeling in it with the market fluctuations they way they are yo-yo'ing right now.

 

[Bobby Dazzler]

In fact they are probably reeling in it with the market fluctuations they way they are yo-yo'ing right now.

Economic slumps help the genuinely rich get richer.

 

[Dryce]

I think the whole culture of living beyond our means is coming home to roost. I hope this correction only goes so far without affecting 'regular' households/mortgage holders. Why should we all shoulder the pain of bad debt and greedy credit?

Ordinary people will have a knock on from this: Pensions

Notice the oil and commodity prices tumbling. A cynic might suggest that apart from a slip in demand there is also a lack of liquidity available to those who were simply trading for profit.

 

[RoseTattoo]

We have all lived quietly on the backs of this for years, financing our houses, borrowing the equity and buying whatever with that. Outside the USA, the UK is probably the most leveraged country around.
In fact you could almost say that with a lack of manufacturing and an emphasis on service industries the UK knowingly (recklessly?) rides the economic wave of boom and bust.
The lessons from this will be learned and built back into the various economic models and business rules. It will help to build future economic stability until the next unconsidered fault line appears. It's better than constant war though isn't it?

 

[wemorgan]

its times like this that im glad ive got enough money saved to live for a year or 2 as in the past ive been so tempted to buy a new car with it

Isn't this the method big buisness is meant to follow too ie. make hay in the good years to see you through the hard times? Maybe their spare money went on excessive bonuses?

 

[recycled]

Are these banks really falling? the directors have took money and stacked their own personal accounts with billions and their pensions are worth millions every year.
yet they say the bank is in trouble.
Natwest was supposed to have made a loss on the housing market yet their managers are earning millions.

They need to rercover what is essentially peoples money from the fat cats accounts

 

[Dragon]

Hope no one here was affected.

So, a top investment bank gone...What has the credit crunch come to?

Bank of America saving Merryl Lynch from a similar situation with 50bn input.

Opinions?

Everyone affected. Our savings and pension will lose out and our mortgage will go up.

Capitalism is definitely failing and Communism is taking a come back.

 

[richard]

Isnt there a 'herd of sheep' problem here that goes like this: -

If one bank finds a way of making money, (lets say lending to groups of people they really shouldnt, but its OK because times are good and there is no need to save (completely untrue of course, it is the time to save, but even the government didnt recognise that) then all the other banks *have* to follow or else they look bad to investors (i.e you and us via our pension funds). So they all do exactly the same thing.

This is even true for the traders on the bank floor. If they dont make money when everyone else is they get sacked and may never get another job. However, if they lose money when everyone else, they all get sacked when banks cut back, but they all get employed again in a year or so time (and the sensible ones do save to cover those times, which happen every 6-7 years as far as I can see)
- so again, they are encouraged to take massive risks with our money because they have to follow the heard

Of course, in the good times the shareholders are quite happy to let the board take silly money (they vote to accept their renumeration package)

Pensions:- I suspect their pensions arent worth millions any year any longer - they are probably exposed to exactly the same risks they took which have come home to roost.
- I think you'll find the gold plated pensions are to be found in the civil service - they used to be a reason for this in that civil servants were paid rubbish wages, but that doesnt seem to be true any more (particularly not now that city wages/bonuses are likely to be somewhat lower) - and AFAIK that is far more problematic than anything that is happening right now - there will not be enough tax revenue to support the ageing population and what will be a *massive* pensions requirement.

Richard

 

[wemorgan]

Capitalism is definitely failing and Communism is taking a come back.

So when is your North Korea immigration application being submitted?

 

[Mudster]

Are these banks really falling? the directors have took money and stacked their own personal accounts with billions and their pensions are worth millions every year.
yet they say the bank is in trouble.
Natwest was supposed to have made a loss on the housing market yet their managers are earning millions.

They need to rercover what is essentially peoples money from the fat cats accounts

Yes and No.....The amounts of money these institutions process and produce are mind boggling......For institutions like this to pay Millions in Bonuses, they are making Billions, and some Trillions.

The market capitalisation of Lehaman Bros at it's peak (not that long ago) was $600 Billion that's Six hundred thousand million Dollars. Most of which is based on intangible assets, i.e it's stock price and what it's owed and has invested.

This governs how much the bank can borrow.

An average bank like Natwest or Barclays can borrow somewhere in the region of 10 times it's deposits...i.e for every £100 you save in a deposit the bank can loan out £1000.....

In the last few years it seems this limitation was just about thrown out of the window and Investment banks were borrowing/lending huge multiples...thus allowing them to lend huge multiples to any Joe Blow that's just been released from prison....of course it didn't matter if they could pay it back or not as capital growth was expanding at such a rapid rate no could lose right?......But the music stopped, all the banks ran to sit down, but some bugger had removed all the chairs not just one....bank after bank is getting hung out to dry......it's going to get more messy

 

[Dryce]

Capitalism is definitely failing and Communism is taking a come back.

LOL.

I think communism has rather well and truly demonstrated its own soiled set of problems.

I would rathe Common Sense made a comeback.