Ram Posted September 15, 2008 Posted September 15, 2008 Yup, we're talking about Lehmann brothers. They're are... err.. were America's 4th largest Investment Bank, with net assets or around $275 bn. And now, their more than 100 year old history may have its last chapter written. The Fed has this time refused to pump in tax-payers money to save the firm, like it did for Freddie Mac and Fannie May. Kinda pity the employees though, especially those who are on the verge of retirement. All their retirement planninng is now dust. On another note, my class mate in high school got into an IIM, graduated a few months ago and just joined Lehmann brothers in London. And now, his job is most probably gone too. What a pity! Related news: Merrill Lynch is about to bought by Bank of America for around $40 bn, while JP Morgan Chase may buy Washington Mutual. Correction; The UK arm of Lehmann brothers, which employs about 5500 people, I think has been bought by Barclays Bank, just like it has bought the investment bank arm of Lehmann Brothers in the US for $250 mn. So, my friend might not have lost his job after all.
Lurker Posted September 15, 2008 Posted September 15, 2008 Yep this is really dicey now. Lehmann Brothers, Meryll Lynch, Bear Sterns are the best in the business. Even if yesterday I was offered a job at Lehmann and Meryll I would have jumped on it. Thats how much their goodwill is, or was really. It is so sad to see all these giants go down the toilet. Then again it is their own greed that has thrown market in a tizzy.
PaiN_KiLLeR Posted September 15, 2008 Posted September 15, 2008 I'm thanking my lucky stars ... I had the chance to join Lehman Brothers' captive BPO in Mumbai with a remuneration package substantially better than my current one but opted out at the last moment because they were not willing to give me enough study leave. Bach gaya!
Ram Posted September 15, 2008 Author Posted September 15, 2008 The housing market's in a total mess. From now on, it will be really really hard to get mortgage to buy your new house. Worse, people who bought homes a few years ago, when the real estate market was booming, have seen their interest payments go up and the value of their homes plummet.
ludhianvi Posted September 15, 2008 Posted September 15, 2008 It had an effect on the stock market as well
fineleg Posted September 15, 2008 Posted September 15, 2008 It had an effect on the stock market as well an effect? Dow is sinking! Save our souls!
Lurker Posted September 15, 2008 Posted September 15, 2008 To be honest, and I dont mean this with antagonism towards anyone, I am somewhat enjoying this Stock Market and Home Mortgage crisis. Since my work often involves working with right the top rung I often see how the Stock market impacts the bottomline. One of the system that I had designed for a Copper Mining company would spit out a P&L statement for them, this in turn was audited by the Accountants and sent straight to NYSE. To make sure the share market would look at it favorably every little effort was made. This mean for a good season nothing was done, for a bad season people were laid off immediately. It was outrageous to see CEO make millions and more, while a poor 60,000$ making person was laid off to cut down the "fat". In the past 30-40 years stock market has literally become the face of economy. You judge the economy by how many points Stock market was up. More importantly it has also led to a moral decay of sorts where people criticize Exxon for making billions, and then would stand in line to buy a share of their. Same with housing market. The reason it is going down the toilet is because of speculation. I am hoping this will lead to overall correction of market, and set right expectations hereon.
fineleg Posted September 15, 2008 Posted September 15, 2008 To be honest, and I dont mean this with antagonism towards anyone, I am somewhat enjoying this Stock Market and Home Mortgage crisis. Since my work often involves working with right the top rung I often see how the Stock market impacts the bottomline. One of the system that I had designed for a Copper Mining company would spit out a P&L statement for them, this in turn was audited by the Accountants and sent straight to NYSE. To make sure the share market would look at it favorably every little effort was made. This mean for a good season nothing was done, for a bad season people were laid off immediately. It was outrageous to see CEO make millions and more, while a poor 60,000$ making person was laid off to cut down the "fat". In the past 30-40 years stock market has literally become the face of economy. You judge the economy by how many points Stock market was up. More importantly it has also led to a moral decay of sorts where people criticize Exxon for making billions, and then would stand in line to buy a share of their. Same with housing market. The reason it is going down the toilet is because of speculation. I am hoping this will lead to overall correction of market, and set right expectations hereon. Lurker, True. However I am skeptical whether it will "set right expectations hereon"...although market may correct for a while. But those greedy millions at the top and trimming the fat system by taking out lower/middle rung people may still continue! PS: Mods - can you move this thread to "Chit-chat" forum. Even though this is in Politics and Current affairs, most may think this is Politics only forum, and may or may not participate since they dont read it. We may get broader participation in chit chat.
satishg Posted September 15, 2008 Posted September 15, 2008 couple of my good friends are in Lehman..feel bad for them now..but this is huge..Lehman filing for bankruptcy is just unbelievable..a 150 year old bank gone just like that because of the sub prime crisis..i mean it survived the world wars..it survived much worser situations
ludhianvi Posted September 15, 2008 Posted September 15, 2008 So if this was a bank, what happens to the people's money since these guys filed for bankruptcy? I know that people's money is insured upto a certain amount but what's the case here? So yeah, you probably figured, I dont much know-how of economics:D
Sachinism Posted September 15, 2008 Posted September 15, 2008 I've got a good friend who works for them gonna suck for him
fineleg Posted September 15, 2008 Posted September 15, 2008 So if this was a bank, what happens to the people's money since these guys filed for bankruptcy? I know that people's money is insured upto a certain amount but what's the case here? So yeah, you probably figured, I dont much know-how of economics:D Ludh, This is an IB (investment bank). I guess you are asking abt traditional consumer banks which are FDIC insured upto a certain amount for regular folks, Beyond that amt no gurantees.
ludhianvi Posted September 15, 2008 Posted September 15, 2008 Ludh, This is an IB (investment bank). I guess you are asking abt traditional consumer banks which are FDIC insured upto a certain amount for regular folks, Beyond that amt no gurantees. Ah I see :embaressed_smile:
punjabi_khota Posted September 15, 2008 Posted September 15, 2008 5 friends lost their jobs. Another person I heard had recently relocated to NY branch from Mumbai, got married and is (was?) on his honeymoon...
Aditi Posted September 16, 2008 Posted September 16, 2008 I've got a couple friends who worked for LB, another IIM-A grad working for Merill Lynch....sucks big time. The carnage on Wall St. is stunning!
fineleg Posted September 16, 2008 Posted September 16, 2008 To quote from Lurks post above: "It was outrageous to see CEO make millions and more...." Rewarding these CEO and Executives so they can go and again run another bank?
The Outsider Posted September 16, 2008 Posted September 16, 2008 It's been coming for some time now and it's not going to stop here. The bail out of Bear Sterns followed by Fannie May and Freddie Mac not sent wrong signals to the investment banks and none of them took corrective measures at the right time like finding a buyer while they could. AIG and Washington Mutual will likely go down as soon as this week maybe. As for investment banks, it's three down and two to go - even Morgan Stanley and Goldman Sachs won't be able to survive this. They will need to find buyers while they can or they are going to go bankrupt as well. Maybe not immediately, but during the coming year. Recession is official, the housing market is still plummeting, and consumer spending is going down. With the kind of toxic assets these guys have coupled with a terrible market sentiment there appears to be no way for any investment bank to cover it's debts over the long run independently. They'll need to sell or merge or go bankrupt. Even finding buyers is not going to be easy. All major players have already bought out companies and are stretched themselves. Bank of America took a 20% beating today at the market translating into $30 billion after they bought Merrill Lynch at what many analysts perceive is too high a price. In fact if they keep spiraling down their board might vote against the purchase of Merrill Lynch, which according to some market estimates still has huge toxic assets. And anyhow Merrill Lynch would be but in half as far as employees go by Bank of America. That's potentially around 50,000 lay offs on Wall Street in a day. Now AIG needs $75 billion to stay afloat - I don't see any company coming out with that kind of money in today's environment to take over a pile of junk. Expect a couple of Chapter 11s/dirt cheap sell offs in the next couple of weeks. And I said in some earlier thread, it's then going to spread over to the smaller players who have positions with these big players not only limited to mortgage but auto loans, student loans etc. It's going to get worse before it gets better.
Ram Posted September 16, 2008 Author Posted September 16, 2008 The American stock prices have rebounded today, which is a big relief.
coffee_rules Posted September 16, 2008 Posted September 16, 2008 No investment is safe these days. FOrget about real-estate. Owners used to buy homes as an investment. Now, it is an expense..a luxurious one at that. The next thing to fall is FDIC, which will affect our checking accounts as well. God damn sub-prime mortgages!
Ram Posted September 16, 2008 Author Posted September 16, 2008 My question, why didnt no one ever predict this? Or even if they did, why didnt they do something about it? My fear is also about whats happening in India. There's just too much easy credit thats available now, with many people buying new homes. At some point, if the jobs market slumps, there is bound to massive repurcussions for us too. I think the RBI needs to tighten credit a bit, even at the expense of knocking down growth a bit.
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