Financial Armageddon!!

[muppet]

Breaking News
•Lehman Files for Record Bankruptcy, Victim of Meltdown Firm Helped Create

•Bank of America Will Buy Merrill for $50 Billion as Credit Crisis Broadens

•China Reduces Interest Rates for First Time in Six Years as Economy Cools

•Treasuries Jump, Stocks Fall, Dollar Tumbles Versus Yen on Lehman Collapse

•Fed Eases Loan Terms, Banks Set Up $70 Billion Fund in `Firebreak' Effort

•AIG Seeks Capital, Plans Asset Sales to Prevent Credit-Rating Downgrades

•Crude Oil Falls Below $97 as Ike Spares Texas Refineries, Lehman Collapses

•Hurricane Ike Leaves Houston Without Drinking Water, Power; Curfew Imposed

•Mugabe, Tsvangirai Sign Zimbabwe Power-Sharing Deal to End Election Crisis

http://www.bloomberg.com/index.html?Intro=intro3

[Badger]

I see Hank Paulson's old place of employment Goldman Sachs is picking up business from Lehman's for nothing

Nepotism at its best!

[Ryutaro]

Plenty of money to be made!

[Baron Silas Greenback]

And plenty of sad stories. Not pleasant to work in Docklands today, plenty of very normal people devastated and in big trouble.

[Ethtre]

very very sad indeed - I wonder how much of the citybank $138b belongs to ordinary peoples college savings, retirement funds etc.

[drelly]

Baron Greenback,

How is it affecting the "man on the ground"? Do you mean job losses or something else?

[Commercial Dan]

This picture says it all!

[Commercial Dan]

Wall Street bank Lehman Brothers has filed for chapter 11 bankruptcy protection after emergency talks to find a buyer failed.
Confidence in the 150-year-old investment bank - the fourth largest in the US - crumbled last week amid growing concerns that its large portfolio of mortgage-backed assets was worth far less than it was originally valued.
During the past year Lehman reported billion-dollar losses and saw its share price plummet more than 95%.
Why did Lehman fail?
Lehman Brothers is considered one of Wall Street's biggest dealers in fixed interest trading and was heavily invested in securities linked to the US sub-prime mortgage market.
With these investments now shunned as high risk, analysts say it was inevitable that confidence in Lehman Brothers would likely be hit - particularly after the collapse of Bear Stearns earlier this year.
In its June to August period last year, the bank said it would make write downs of $700m as it adjusted the value of its investments in residential mortgages and commercial property.
One year on this figure soared to $7.8bn, which last week resulted in Lehman reporting the largest net loss in its history. The bank also admitted that it still had $54bn of exposure to hard-to-value mortgage-backed securities.
Despite having access to cash reserves, worried investors pummelled the firm's shares last week after talks to raise billions of dollars from outside investors ran into a brick wall.
How does it affect me?
Nobody has a Lehman Brothers cheque book or current account. The company is an investment bank that specialises in big and complex deals and investments.
Despite this, Lehman's collapse will probably be felt by millions of people around the world - at least indirectly.
Most of our banks and pension funds have dealings with Lehman, or with firms like hedge funds that traded extensively with Lehman.
Unwinding Lehman's complex deals could take weeks or months. During that time the global financial system will be snarled up. Many banks won't know for sure how much they are exposed to Lehman, and will have difficulty freeing up the money in those deals.
This in turn is likely to intensify the credit crunch, with potentially dire consequences for businesses and consumers.
And the dramatic collapse of Lehman Brothers has also shaken the financial markets, with share prices slumping around the world.
Are any other firms in trouble?
Well, for starters there is Merrill Lynch, another large US investment bank. In a surprise move, Bank of America agreed on Sunday to buy Merrill Lynch.
The fear was that investors would have started a witch hunt for the next bank with heavy exposure to debt linked to mortgages, the value of which continues to tumble, and Merrill Lynch would have been the likely suspect.
The biggest worry, though, is insurance giant AIG. Reports suggest that AIG has asked the US central bank for a $40bn bridging loan.
If AIG is in trouble, it would directly affect millions of consumers and companies around the world. It would also hurt the whole financial system.
And compared to AIG, the crisis surrounding Bear Sterns and Lehman is small beer.
Why didn't the US Treasury save Lehman Brothers?
When Bear Stearns ran into trouble, the US Treasury made the terms favourable for JP Morgan Chase to buy it.
And just last week, the US government effectively nationalised Fannie Mae and Freddie Mac, which between them own or guarantee about half of the $12 trillion US mortgage market.
So already the US tax payer has been put at risk of shouldering the burden of billions of dollars of losses, and it is becoming politically less acceptable for the government to keep bailing out private companies.
By not giving UK bank Barclays a guarantee for Lehman's trading obligations as part of a deal to buy the business, analysts say the US Treasury has put a line under its willingness to use public money to rescue banks which have made wrong decisions.
Instead, government officials have focused on supporting the financial system in other ways, announcing measures to ease access to emergency credit for struggling financial companies.
How big is Lehman Brothers?
Founded in 1850 by three immigrants from Germany, Lehman Brothers has been a prominent investment bank in Wall Street for decades.
It operates at a wholesale level, dealing with governments, companies and other financial institutions, employing 25,000 people worldwide, including 5,000 in the UK.
Its core business includes buying and selling shares and fixed income assets, trading and research, investment banking, investment management and private equity. As the crisis in financial markets has gathered momentum, it has seen its share price collapse from $82 to less than $4 - a fall of 95%

[Tucker]

Someone has made a packet owing a put option on that.

[exnzpat]

I can’t see how this could affect the NZ housing market? Interest rates will go down and people will continue to pump money into the NZ housing market. It’s all good!


Nah! Just fooling – pity you guys confused my sound financial knowledge and intuition with “doom and gloom” scenarios.

The bottom is still a long way off and New Zealand has yet to feel the pinch of the credit-crunch, and is at least 6 months away from feeling the effects of last week (let alone the next coming weeks). It’s going to get ugly down there!

By the way, you should know that worse is yet to come, Leman Brothers is small potatoes.

[cube]

13/7/2007 http://www.propertytalk.com/forum/sh...ad.php?t=11760

Many of the low-grade loans are believed to be held by US lenders caught up in the collapse of the subprime mortgage market. Some of the world's biggest banks supported the loans sold by Mr Sadek and other brokers. Citigroup, Morgan Stanley, Lehman Brothers and JP Morgan Chase in the US and HSBC and Barclays are just some of the lenders sitting on huge losses.

Wonder why Barclays didn't/couldn't buy Lehman

[cube]

I can’t see how this could affect the NZ housing market? Interest rates will go down and people will continue to pump money into the NZ housing market. It’s all good!


Nah! Just fooling – pity you guys confused my sound financial knowledge and intuition with “doom and gloom” scenarios.

The bottom is still a long way off and New Zealand has yet to feel the pinch of the credit-crunch, and is at least 6 months away from feeling the effects of last week (let alone the next coming weeks). It’s going to get ugly down there!

By the way, you should know that worse is yet to come, Leman Brothers is small potatoes.

At what point does all the toxic waste that the Federal Reserve has been taking in start to impact on its viability. After all, its a private company as well....

[k1w1]

http://www.thedailymash.co.uk/news/business/masters-of-universe-file-for-bankruptcy-200809151254/

[TonyMacaroni]

At what point does all the toxic waste that the Federal Reserve has been taking in start to impact on its viability. After all, its a private company as well....

A private company yes, with the unique ability to print money at will and charge interest on it. The people who lose if they print money in exchange for worthless collateral are the holders of dollars, who get diluted, not the creaters of the dollars who can always make more.

Sounds like a pretty good business model to me, can't lose. More like a casino operator that allows some punters to get fleeced and others to continue playing on the house... in the end though, the house gets everything.

[OllyN]

Anz/nab

Do I read correctly?

ANZ Melbourne owed $25M
ANZ Korea owed $44M
NAB New York owed $10M

Total $79Million US?