Lehman Brothers files for bankruptcy
I am not a finance type, so what does it mean for the ordinary person???
Telegraph..
Lehman Brothers, one of the world’s biggest investment banks, has announced it is file for bankruptcy, in one of the worst banking collapses in history.
As the world economy prepared for a round of devastating blows caused by the credit crisis, Bank of America also agreed to buy Merrill Lynch, another giant of investment banking, for $50 billion in a deal creating the world’s largest financial services company and saving Merrill from Lehman’s fate.
Asian markets tumbled on the news, while European and American markets were expected to follow soon after opening.
Coupled with moves by other Wall Street giants, billions of pounds worth of value from pension funds and other investments could be wiped by the end of the day.
The news of its crumbling came as the global financial system faced its biggest test in at least half a century as several other of the world’s leading firms took drastic emergency action.
American International Group, the world’s largest insurance company, was planning a radical restructuring of its business, which would see it sell its aircraft leasing arm and raise $20 billion from new investors.
Alan Greenspan, the former chairman of the US Federal Reserve and a leading economic expert, warned: “Let’s recognise that this is a once in a half-century, probably once in a century type of event.” He added that it was the worst “by far” he has seen in his career.
The former central banker also warned that “we will see other major firms fail”.
The collapse of Lehman Brothers, which fell into difficulty as a result of its exposure to the troubled American mortgage market, could also threaten the 4,000 jobs at the bank’s European headquarters in London.
The US Treasury and the Federal Reserve had previously committed taxpayers’ money to rescuing Bear Stearns, another bank, in March.
Fannie Mae and Freddie Mac, which underwrite most of America’s mortgages, were “nationalised” just a week ago after running into serious difficulties.
In the case of Lehman, however, the US government was unwilling to pursue a similar policy. City analysts had called into question the health of Lehman’s balance sheet in spite of several rounds of fund-raising.
Hello? Well, I sort of looked up Chapter 11, Title 11, United States Code on Wikipedia and noticed that it said ,"If the company's stock is publicly traded, a chapter 11 filing generally causes it to be delisted from its primary stock exchange if listed on the New York Stock Exchange, the American Stock Exchange, or the NASDAQ. On the NASDAQ the identifying fifth letter "Q" at the end of a stock symbol indicates the company is in bankruptcy (formerly the "Q" was placed in front of the pre-existing stock symbol; a celebrated example was Penn Central, whose symbol was originally "PC" and became "QPC" after the company filed Chapter 11 in 1970). Many stocks that are delisted quickly resume listing as over the counter (OTC) stocks. In the overwhelming majority of cases, the Chapter 11 plan, when confirmed, terminates the shares of the company rendering shares valueless." So I don't whether what you said was logical or not? What do still think I should do with my Lehman Brothers shares?
September 15, 2008, Lehman Brothers Bank filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York. It was a relief to read your blog concerning this Chapter 11 Bankruptcy because I spent quite amount of money on their shares and I still hoped they would not go kaputt. So you are basically saying that I can keep the LEHMQ shares and that I don't really have to sell them?
i've just gotten rid of most of my investment bank holdings. good time to buy into bank of america, although it would make more sense to wait and see it goes till 26.
I think we are for here a good long time. It will be damn difficult to get a job in finance in the west. I am also worried about AIG. I think if they were a bank they would be bankrupt. Unlike banks, insurance companies do not have to mark to market so they can hide the junk they carry on their books for longer. However, the quality of their collateral is so poor they cannot borrow against it and they have no liquidity. No liquidity means no way of meeting obligations. This means bankruptcy. Unless of course, the Fed bails them out.
Hank Paulson said no more bailouts for banks but what about insurance companies?
Just call me Tigasin. That's what I'm talking about
what about canadian dollars?? Tig, what should I do with them? to sell? to buy a gold?? what????
Watch AIG closely the next 2 days....Merryl Lunch and Goldman Sachs still have yet to announce their 4th qarter earnings...I pray that Wan Mu gets bought out quickly....I Shudder to think about it...
This may well be the end of wall street as the financial center of the universe! I hope i'm just being overly dramatic, but I can't help being pessimistic =(
What do you think tig....we stuck here for the next 2 decades?? (crying)
Stay safe all.
Perfection does not exist. The question therefore, is: what level of imperfection are we willing to settle for?
It doesn't work that way. Chapter 11 is a temporary protection against creditors that allows companies and some individuals to reorganize themselves and if possible trade their way back to financial health. Creditors foot the bill not tax payers.
It was because the Fed did not want to place the burden on tax payers that Lehman Bros has hit the wall. This was not the case with Freddie Mac and Fanny Mae who both had Federal guarantees. In those cases, the tax payer will foot the bill.
Just call me Tigasin. That's what I'm talking about
Don't forget that the taxpayer has to foot the bill..
BUT, isn't Chapter 11 a cop out ? I mean , in a free market economy, should companies be allowd to go Chapter 11, or should they just go belly up??
which means that Lehman Brothers will still exist and will be able to continue to trade.
You Brits don't have Chapter 11 and that's why whenever these British travel firms go to the wall (which they are now in droves) the planes get grounded and the passengers stranded.
Just call me Tigasin. That's what I'm talking about
How come we Brits are the poor relations here ??
I've got about 230QR in my pocket and the son's boarding school fess are due:(
BoA is becoming the Microsoft of investment banks.
i need my sniffing salts...
i have 10 $ in this bank!
:(
Merrills clsed at around $27 on Friday and I think Bank America are paying around $50 billion which is a big premium of Fridays close. Bank America must be kicking themselves. If they had known that Lehman Bros was going to the wall today, they could have picked up Merrills at half the price.
Just call me Tigasin. That's what I'm talking about
commercial bank isnt an investment bank. it should be safe.
Just checked my wallet and I've got QR127 and a voucher for a free car wash at Landmark Mall? Is that enough for Commercial Bank?
Finally. Someone bought Merrill. They were so close to declaring bankruptcy..
As I write, the Doha Stock Market is down 6% on the day so far and Dubai is down 9%. Commercial Bank and Qatar Navigation look like bargains. Who is brave enough to buy?
Just call me Tigasin. That's what I'm talking about
The Libor markets are way out of sync with interest rates and credit spreads are widening rapidly. Treasuries yields are falling and prices rising. Tough times ahead folks for all.
Just call me Tigasin. That's what I'm talking about
because it is considered safe.
bonds are also good when equity markets fall.
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"Even a stopped clock gives the right time twice a day." Withnail & I
Damn the falling pound! Everything in Qatar has suddenly got 10% more expensive for me since the pound fell against the dollar.
the spanish economy will certainly do worse than the US economy. their property market is in serious trouble.
the UK will also perform badly, possible also worse than the US economy.
if that is the case then the euro and pound will weaken too, meaning that the USD won't fall as much relative to other major markets.
things will certainly get worse, but historically the US economy has bounced back quicker than european economies.
if you want to be safe, hold a good, solid balanced fund with a reputable company and ride it out. if you know what you're doing you can play the market, but many people who think they know what they are doing end up realizing that they don't.
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"Even a stopped clock gives the right time twice a day." Withnail & I
You mean its good time to invest in Gold?
Asian stock markets tumbled as investors reacted with shake-up on Wall Street....two major pillars of Wall Street crumbled.
Do ML guys loose their job by this take over?
...then when the dollar plumetts you can pay off all of your mortgage!
:)
Whyyyyyyyyyyyyyyyyyyyyyyyyyyyyy!
The dollar will fall, which means I get less pounds for my Qatari riyals and my mortgage payments go up..
Damn the Americans!!!!!!!!!!!!!!!!!!!!
I don't think this is the end of it. Things will get much worse before they get better. Looks like I won't be going back home anytime soon either.
it means that today is a Black Monday...
it is a financial disaster.
If you're looking for a problem, you're probably gonna find one.
:)
yes the dollar will fall and the Dow Jones will fall and the pound and the FTSE. Gold will rise and you can make money if you know what stocks to short.
Just call me Tigasin. That's what I'm talking about
...the dollar just keeps losing so that I can make some money!
hehehehe. ....Yes I make money off bad news, and what?
This is the worst financial crisis in decades and is going to affect all of us wherever we are. Guess I am going to have to stay here in Qatar for a few more years as there won't be any jobs on Wall street, that's for sure.
Just call me Tigasin. That's what I'm talking about