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The meltdown of the world’s largest insurer AIG (AIG) makes the stakes of this credit crisis plain to all.
In my view, the AIG situation and the subsequent turmoil in financial markets could have been avoided. The markets were clearly on edge at this time last week. However, Hank Paulson and Ben Bernanke, worried about [...]

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Dick Fuld, the Chief Executive of the beleaguered and now bankrupt investment bank Lehman Brothers, finally addressed staff after the worlds largest bankruptcy in history. He told staff he felt horrible for their personal and financial loss. Below is Bloomberg’s summary of the event.
Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld told [...]

Update 04 Mar 2009: Marshall Auerback sent me a story about Dresdner bankers suing to get tens of millons in bonuses. Obviously the house in Kent and the private clubs and schools have to be paid for. His story here reminded me of this article which I am re-posting.

The headline of an article in the Times of London caught my eye this morning. It read: After Lehman Brothers: desperate City wives. The article makes for interesting reading. People who used to live in the lap of luxury go from gazillionaire to being penniless overnight as their entire net worth is wiped out.

Love them or hate them, investment bankers are taking a shock to the system.

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It’s been bothering me for some time — the fact that Lehman failed and Merrill was taken out at a deal time value that was a significant premium to both book value and the prevailing price of its shares in the market. It seems rather unfair.
You’ve got Lehman on the one side, swept into the [...]

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It’s done. Core Lehman is sold. Now the rest of the company can be liquidated. Barclays will buy the core assets for a measly $2 billion. For Lehman staff in the US, this has to be a relief. However, staff in London are probably left out in the cold as [...]

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One reason I came out this morning against the Fed and the U.S. Treasury’s decision to allow Lehman Brothers to go bankrupt is the arbitrariness of its decision-making process. Lehman is easily more of a systemic risk than Bear Stearns and is certainly a larger company. Why let Lehman fail? Why rescue Fannie [...]

Update Mar 2009: There is a pernicious little piece of historical revisionism going around that the Lehman bankuptcy did not matter. I am reposting this as a retort.

Note the piece by James Suriowiecki which induced me to re-post:

In the past few days, though, a new meme has started circulating through the economics blogosphere, suggesting that Lehman’s failure actually did not wreak the havoc that everyone who lived through last September thought it did. This argument, which was floated by the well-respected macroeconomist Willem Buiter on Friday, is based on a paper from last November by the Stanford economist John Taylor, which purports to show (pdf) that the credit markets actually did not react all that badly to Lehman going under and that the crisis was really the product of market uncertainty about the effects of government action.

Below is the original post from 16 Sep 2008.

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I am not a certified financial planner and therefore, do not give financial advice or investment advice. Anyone looking for financial advice is advised to see a independent certified financial planner to help them with their investments.
The Certified Financial Planner (CFP) designation is a certification mark for financial planners conferred by the Certified Financial Planner [...]

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Update: 815AM EDT: Unable to find buyers in around the clock talks, Lehman Brothers has filed for bankruptcy protection. On Friday, it was learned that Lehman had hired bankruptcy attorneys. Now, the worst has come to pass: Lehman has declared Chapter 11 insolvency. In a move reminiscent of the Drexel Collapse in [...]

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In case you missed it, the financial system in the U.S. is near collapse. This weekend was unbelievable. Lehman Brothers filed for bankruptcy. The world’s largest insurer AIG is looking for the Fed to help it avoid collapse and Merrill Lynch was forced to close a deal with Bank of America to save [...]