Lehman Brothers

>>1554893

Assets were laughable.

Basically insolvency.

>>1554893
All their assets were garbage. They wouldn't be able to save themselves even with a bailout.

Because they lost the game of musical chairs being played with toxic assets circulating the financial industry circa 2008.

>>1555123
Very nice analogy.

>>1555123

> this is actually what happened
> literally

>>1555033
>>1555115
This is actually completely false. Their assets weren't different from the other investment banks.

Read "The Fed and Lehman" by Lawrence Ball. A nice paper that talks about this issue

>>1554893
Wall Street grudge and politics. Hank Paulson was ex-Goldmanite. LEH used to have top tier culture combined with ferocity and hustle in their ranks.

Another point is that two banks declined to bail LTCM. Bear and LEH. Karma came back.

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>>1554893
Henry Paulson was an idiot, that's why. Nothing more, nothing less.

https://www.youtube.com/watch?v=2il9GCaUSwI

>>1556948
Merril Lynch, Wachovia. They also were acquisition ed. I felt they leveraged too much their weight into toxic assets. And if you remember right, rumors circulated of a Goldman collapse was imminent. The immediate stimulus was freely given to prevent hemorrhaging banks collapsing everywhere as soon as the derivative that people were holding all became junk. There was near hysteria in the Congress and Fed, at which point they saved almost everyone.

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>>1556989
Why couldn't Lehman be acquistioned by another well-capitalized bank, perhaps Barclay's or even Goldman?

Is it literally just because of
>>1555123
>>1555033
>>1555115

>>1556925
Should they have been bailed out? Would a bailout have prevented a normal financial crisis from spawning into the biggest recession since the Great Depression?

>>1556925
Thanks for that recommendation.

>>1557545
>Would a bailout have prevented

No.

A sum of around 40% of the US-American GDP was - in one way or another - involved in a real estate Ponzi scheme. There was no way to prevent a recession once this scheme was exposed.

>>1558176
A bit off topic, but could a bank the size of Deutsche Bank still be bailed out reasonably? Does the 50 trillion give or take the bank has in derivative exposure matter, or do we just need to make them profitable?

>>1554893
No assets. IIRC negative equity. It was a black hole.

>>1558258
Would that also have prevented a merger with another solvent bank with the oversight of the Fed?

>>1556948
Bear and Lehman bailed out LTCM on sep 1998

>>1556954

/thread

he thought letting Lehman brothers fail would set an example to Wall Street that the USA won't help you out if abandon moral principles of investing and just fuck everyone.

>>1558643
So they panicked once AIG collapsed and realized things were much bigger than they thought and proceeded to hand out free money to the Wall Street banks?

>>1558604
Bear Sterns and Lehman literally refused to participate in the bailout.

$300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS
$125 million: Société Générale
$100 million: Paribas, Credit Agricole[29]

(source: https://en.wikipedia.org/wiki/Long-Term_Capital_Management#1998_bailout)

>>1558725
the same wikipedia page states at the very begining :
>leading to an agreement on September 23, 1998 among 16 financial institutions — which included Bankers Trust, Barclays, Bear Stearns, Chase Manhattan Bank, Credit Agricole, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Paribas, Salomon Smith Barney, Societe Generale, and UBS — for a $3.6 billion recapitalization (bailout) under the supervision of the Federal Reserve.[2]
>Bear sterns, Lehman brothers

>>1558723
Read this:
>http://www.goodreads.com/book/show/15737379-bailout

>>1558723

Precisely. They hit the panic button bigtime, they were terrified of another great depression.

>>1558232

The 50 trillion exposure is an overblown, hypothetical value that would be correct IF Deutsche Bank lost all of their thousands of bets at once.

To support the Deutsche Bank short-term, a capital injection of around 20 billion would be enough.

>>1558805
They have $1.2T in cash sitting on their balance sheet as of the last time it was updated. Just a heads up.

>>1558828
Why is there talk about a bailout then? Is it just zero hedge hype?

>>1554893
Because overexposure to a fuckton of derivatives, which only a dozen people knew what it was all about at the time. Deutsche Bank is the same, by the way.

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>>1556954
>Max Keiser

Lel

What the fuck is his argument here, that the bubble could have just continued forever if Lehman hadn't been allowed to fail?

Lehman was just the catalyst, if it hadn't been them it would have been something else

>>1559383
Nope, his argument is that Hank didn't bail-out Lehman because he was a Goldmanite faggot.

The CDS bubble would have burst regardless, however if the state did bail Lehman out, as they did with the other BB's, it wouldn't have caused as drastic impact on the world economy as it did.

CDS were crap, people knew that after the first collapses of Fannie Mae und Freddie Mac, however not the CDS caused widespread 2008 panic, but the notion that BB's could fail, which was entirely caused by Lehman falling. This had the consequence of people retrieving capital from EVERY bank invested in that shit and not only in that shit, which was other than Wells Fargo I believe everyone else of importance.

Hank the Hack Paulson saw the crap he created and had no other choice than suck cock for bail-out money once it was too late.

He was a genuine idiot and will be remembered as such.