Lehman declares bankruptcy; Bank of America buys Merrill Lynch

Merrill Lynch survives, but Lehman Brothers is on the way out.

Roppongi Hills will be losing big money soon as well-as will many businesses Lehman Brothers employees patronized in the area.

Too bad, so sad. Good luck, Lehman Brothers with the "orderly unwinding" of your businesses!

Collapse of Lehman Brothers likely to cause severe damage to financial markets, Black Monday.

"Are you enjoying watching this? You think this is funny?"

No, not particularly, but the games you people play with the world`s economy in your lust for riches just end up screwing everyone, so I cannot say I have a whole lot of sympathy for you.

"Many economists are now forecasting that the economy could slip into recession by the end of this year and early next year."

The worst is yet to come-in both Japan and the U.S.

If you have based a large part of your political and economical manifesto (and the ensuing tax budget) on an oil war thousands of miles from home (in Iraq), then domestic issues such as the false-bottomed mortgage lending will come back to haunt you. Lesson number one George W, you should have protected the domstic economy first before spending billions on a war in the name of your father. Thatcher (alarmingly very similar politically to the Bush family), did the same harm at the end of her reign after years of a false mortgage lending market.

Long live Moral Hazard. No sign of colamericas propaganda in this thread. I suspect this bank may have been rescued had Carlye group been a stock holder. BTW moral hazard is having to suffer the consequences of your decisions...whether they be good..or bad..it results in more sensible behaviour.

American banks and securities houses are a joke. Even more poorly managed than the Japanese banks were in the 1980s and 1990s.

Not so long ago Wall Street types would cheer every time a company laid off staff, busted their unions, or shipped jobs off to China. Building shareholder value, increasing efficiency, controlling costs, etc. etc. And if anybody complained they were told that they didn't understand the free market, and lectured on the need for "flexible" labor markets and job retraining programs. And all that time it turns out that a lot of them were just a bunch of bozos who didn't have a clue what they were doing, and were running their companies into the ground. Now that the shoe is on the other foot, they get no sympathy from me. It's just a question now of how badly this all ends up damaging everybody else who had nothing to do with the finance bubble.

I think this is a sign of bad things to come. I can't remember anything like this happening and with today's Americans I haven't any faith left...

I think it is time for Americans living here in Japan to stop paying any taxes to the US as we are getting ripped off.

Well, well, well, what da ya know, international bankers aren't any smarter than me after all. I could have run these companies into the ground for less than half what the CEOs were making.

Proxy makes a good point. People rewarding themselves for lousy performance. Ah, it's good to be king.

In a little-reported story over the last week: The United States has formally requested that the IMF conduct a survey of its financial health. (Heard on NPR this morning in relation to AIG and Lehmann Bros.)

And I thought the Bush tax cuts were going to bring us nothing but prosperity.

just the tip of the iceberg really -expect more of the same to continue. Is your bank in trouble?

What really helps the U.S. Is the millions of immigrants that come here every year -and most will eventually want houses. =if this financial situation was in Japan it would be worse.

But how worse can it get and where was the oversight (the parents). As usual the U.S. Gov did nothing until it was a crises situation. The banks/Gov should have cooled down the lending.

Good time to get a deal on a house, bad time to invest in banks and financials.

But how worse can it get and where was the oversight (the parents). As usual the U.S. Gov did nothing until it was a crises situation. The banks/Gov should have cooled down the lending.

They would have been accused by the political forces who are against "big government," and who have fought to dismantle all regulation in the name of privatization, of meddling in the market and holding back growth.

You know this is true, don't you?

I have absolutely zero sympathy for Lehman Brothers. Goodbye and good riddance.

Battle and failures are same, 9.11 and chapter 11, unsecured uncontrolled but well civilized world.

"I have absolutely zero sympathy for Lehman Brothers. Goodbye and good riddance."

I said I did not have a whole lot of sympathy for them, but you seem to have a much stronger feeling against them, sarge. Did you have some specific problem with Lehman Brothers? Or is it just your overall impression of them and how they did business?

but many who wants to get rich falls into many temptation for the love of money is the root of all evil and yes, greed was rewarded to its full. The fall of one of the biggest bank in America send shiver to the spine of world economy and history is bound to repeat itself just like the great depression time. A lot of people got burned, and yup fire is still going and no end in sight at the moment

pathat - Correct me if I'm wrong ( I could be ) - They have $60 billion in soured real-estate holdings. They are even worse managers than Chrysler, Ford or GM executives. For years they made tons of money without producing anything of value. Who needs them?

Much big thanks to George Bush and company. What an "accomplishment" to go from a budget surplus during the Clinton years to a nation in dire straits and at the mercy of other nations just salivating at the prospect.

I think that this would have happened even if GWB was not in the White House. This is the same with what happened in the .com era. If anything, I remember hearing a speech by Bush a few years ago saying that there were not enough minority home owners. One of the reasons he listed was due to the high cost of the initial down payment. This led to the creation of the sub prime loan situation, and people began to see how they could make money by offering those teaser loans.

Well, just like some of the borrowers got hit with a higher loan cost and decreased value in their property, so now the lenders have faced the same thing. Too bad. Many honest people got screwed just simply by trying to achieve the American dream of home ownership. True, some people got loans that they had no business getting for houses that they couldn't afford, but I guess greed goes both ways from the poor to the rich.

One other thing, Sen. Biden was a big proponent of deregulating the credit card industry and voted to let them have the leeway that they have now. I even think he voted for the new Chapter 11 and bankruptcy rules that make it harder for Americans to file, and easier for credit companies to come after them. I expect when Congress gets back in session, we will probably see a few changes made to these laws again.

I think that this would have happened even if GWB was not in the White House.

Alphaape, I sense you are loathe to answer questions since you have conveniently avoided every one I've asked you, but here's another:

Are you implying that a president and his cabinet could have done absolutely nothing to alert the American people to the consequences of this debacle?

If anything, I remember hearing a speech by Bush a few years ago saying that there were not enough minority home owners.

You would be so much more credible if you backed up statements like this with more than your own personal memory. Every Bush speech has been recorded and is available for discussion. Even so, if Bush's speech led to the creation of these sub-prime loans, then why do you claim that anyone else would have been just as responsible?

Maff

American banks and securities houses are a joke. Even more poorly managed than the Japanese banks were in the 1980s and 1990s.

Blatantly untrue. These great houses are all about managing risk. If you think that managing risk in the future is going away you are crazy. Now the market is riskier than ever. If you want to withdraw all your money and put it under a mattress go ahead. As soon as the market decline is over, and it will be over, those who buy the undervalued stocks will obtain the highest gains. The same will be true of things individuals, private equity firms and corporations will never own but still buy and sell the contract for the right to own, buy or sell.

There will always be a need for capital for leveraged buyouts and capital investments in which investment bankers will be required. The instruments to achieve these transactions and the ability to arrange financing will always be needed. The world is going to need these experts for a long time if you want to see growth in markets and economies for that matter.

Whether markets are in decline or are in growth territory risk will need to be managed. Part of that will be collecting large sums of money and dispensing it. If the gross world product grows, and I would never bet against that, there will be a greater need for Investment houses not less.

Let's face it those who sold stock short or bought puts are making a killing with the dive in the stock market. Some who have purchased puts were just hedging against stock they owned; their stock may have occurred losses already. But there are others who did not own the stock purchased puts and now are acquiring pure profit by exercising the option on the seller.

Study the capitalization of emerging markets and you will see that the tigers of Asia and other successful economies were built using capital from Investment bankers and Private Equity firms.

Alphaape brought up the change in bankruptcy laws that the Republican were anxious to pass; legislation to help bankers and hurt debtors who were tapped out and had hit bottom. I believe that it is now coming home to haunt lenders who were unscrupulous. The lenders were lending money that people could not pay back. So now the borrowers can't pay back the money because they are broke. Maybe the borrower can't write off the debt but the banks are still not going to get money nevertheless. It may even keep the debtor from obtaining certain jobs he or she is qualified for and that will also not be good for the economy. The same is obviously true for lending money for housing. The lenders were lending money that the borrower could not pay back either by overextending the potential homeowner's credit or by choosing borrowers that had terrible histories of paying back money.

So I neither praise the decline of these huge investment firms nor do I have anything but disdain for the recent rape of the American consumer precipitated by the Republicans in the pockets of the bankers.

goodDonkey:

B-b-b-b-but weren't Bush's tax cuts and deregulation supposed to bring us unlimited prosperity?

"Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

"True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

"The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

"Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men."

Franklin Delano Roosevelt -- First Inaugural Address

yabits - All the tax cuts in the world aren't going to help badly managed companies like the Lehman Brothers.

"pathat - Correct me if I'm wrong ( I could be ) - They have $60 billion in soured real-estate holdings. They are even worse managers than Chrysler, Ford or GM executives. For years they made tons of money without producing anything of value. Who needs them?"

All good points, sarge.

All the tax cuts in the world aren't going to help badly managed companies like the Lehman Brothers.

They're not? According to Bush, tax cuts are the solution for everthing. He has never made any caveats, just like he said we could have tax cuts and maintain a budget surplus. (He lied.) I'm sure the folks who made millions running Lehman Brothers -- a 125-year-old company -- into the ground have all been enjoying their tax cuts. After all, according to Republican Doctrine, tax cuts should have provided all the needed incentive to hire the best managers.

And now, ordinary taxpayers are going to have to cough up the money to salvage what is left of the financial giants like AIG. To me, it seems only fair that those who made their millions building this house of cards ought to be taxed far more heavily to repair the damage their poor decisions caused.

As was stated today by a guest on The O'Reilly Factor, this financial meltdown comes a full six years after the Enron-Arthur Andersen debacle, and there was a lot the Bush administration could have done to have prevented this.

It certainly helped knock "lipstick on a pig" off the front pages.

yabits,

You would be so much more credible if you backed up statements like this with more than your own personal memory. Every Bush speech has been recorded and is available for discussion. Even so, if Bush's speech led to the creation of these sub-prime loans, then why do you claim that anyone else would have been just as responsible?

I am going to post a link for you to go to a podcast of the Micheal Savage show. I am not sure if you like his politics or not, but he is known to cut across ideological lines and call a "spade a spade." When you get to the link, look for the clip from Sep 9th, Hour 1 and listen to it. In the first minute of the clip you will hear GWB give his speech that I was referring to about how more needs to be done to get non "Angelos and Blacks" (those are Bush's own words that he uses) into situations where they can afford to get loans to get houses.

Here is the link: http://www.910knew.com/cc-common/podcast/single_podcast.html?podcast=savage.xml

Take a listen, and then tell me if I am wrong.

Success has many fathers, but failure is an orphan. In last 15-20 years banking firms were trying to make big profit, but they failed. There marketing way was totally wrong. First force a customer for housing loan without knowing that his/her jobs may ship to cheap labor countries. Once a person lost his/her job, who will pay back his/her loan.

Blindly investing in real estate. No proper investigation at the time of domestic and overseas deals. Lehman is a very small example.

Alphaape, Thank you for the link.

I listened to several shows by Mr. Savage and found myself agreeing with most of what he was saying. So I cannot say you are wrong.

Personally, I have always been skeptical of the notion of a house as an investment, house-flipping, and trying to put everyone into homes in order to keep inflating prices. However, I am not a fatalist and so I have to believe that different leadership would have led the country to a different outcome.

Americans are definitely going back to the 70s: high interest rates, high inflation.