Simon Johnson has coined the phrase, Lehman Brothers was Ice 9. How apt and if you don't know what ice-nine is, read Cat's Cradle.
A new memo was released which showed Lehman Brother's executives knew their bankruptcy would cause a domino effect to start the financial crisis.
Bloomberg got a hold of the confidential memo:
The warning was ominous: “Massive global wealth destruction.”
That’s what Lehman Brothers Holdings Inc. executives predicted before they filed the biggest bankruptcy in U.S. history. “Impacts all financial institutions,” read one bullet point in a confidential memo prepared for government officials obtained by Bloomberg News. “Retail investors/retirees assets are devastated.”
(See CNBC bothering to dig this deep? So why is Bloomberg not part of the base cable/satellite packages instead of noisy CNBC?)
“They put the entire financial system at risk, and they didn’t have to,” said Harvey R. Miller, a partner at Weil Gotshal & Manges LLP in New York who represented Lehman in the bankruptcy, referring to government officials. “They were warned. I told them, ‘Armageddon is coming. You don’t know what the consequences will be.’ Their response was, ‘We have it covered.’”
Bloomberg also notes how instead of limiting the possibility of systemic risk, the government response has been to increase systemic risk.
It's a dynamite article, read the whole thing.
So my question is if they had bailed out Lehman, just how much U.S. taxpayer money might have been saved?
Still seems it's still ignoring the obvious, if regulations were not changed ignoring the wisdom of those who lived through the Great Depression, none of this would have happened.
I'll try a phrase myself. The government making larger, giving even more power to select banks such as Goldman Sachs, Citigroup, JPMorgan Chase...is plan 9 from outer space.
The dynamics of the weekend meeting sound more like
a pack of vultures than a group of concerned U.S. citizens about the future of our economy and financial system. Bloomberg article is very generous in itself description.
The other financial conglomerates and financial oligarchy gave flying fu*k whether Lehman Brothers survived. They knew that with them out of the picture meant less competition and more business for them. They were all concerned about their own asses rather than the system as a whole.
[Emphasis added]
RebelCapitalist.com - Financial Information for the Rest of Us.
RebelCapitalist.com - Financial Information for the Rest of Us.
And the Big Banks are getting bigger.
This is no surprise. Check out the graph
RebelCapitalist.com - Financial Information for the Rest of Us.
RebelCapitalist.com - Financial Information for the Rest of Us.
Background story
If one goes back during that time and closely examines the market data surrounding the short-selling of Lehman and Bear Stearns, it sure does appear as if Goldman Sachs, JPMorgan Chase and Deutsche Bank (or their subsidiaries) were really pulling down the bucks on these situations.
Another excellent Bloomberg article (along with this blog, of course) which demonstrates how those securitized derivatives are multiple layered throughout the global markets. Study any area closely, e.g., CPDOs (Constant Proportion Debt Obligations), credit default swaps, naked swaps, ILWs, reinsurance plus notes, etc., etc., etc., and one begins to get an inkling of how these financial instruments are interlocking via pension funds, foundations, banks, financial institutions, and almost every type of investment entity imaginable, all the while creating paper billionaires while cannibalizing and destroying economies (Iceland, Latvia, US, Italy, etc.).
The layers of superleveraging upon superleveraging upon superleveraging, impossible to ignore (except by Bernanke "the Great Depression expert" and Geithner, and all the rest of those clowns), would give any rational person the extreme shakes, but the billionaires and zillionaires continue to dissolve this economy, and others around the planet.