Analysis: Lehman and The World
The Lehman Brothers Holdings Inc (NYSE: LEH) which is a global-financial service firm filed for bankruptcy protection; on September 15, 2008, the filing marks the largest bankruptcy in U.S. history. The following day however its investment banking and trading divisions were acquired by Barclays along with their New York head office. It impacted the world stock markets including the SENSEX and the NIFTY, the local markets in India. The SENSEX duped to around 700 points due to the horrifying news.
Merrill Lynch & Co., Inc. (NYSE: MER) also has been facing problems and on 14 September 2008 for Bank of America to acquire Merrill Lynch, if approved by regulators and shareholders of both companies. Lynch also like Lehman Brothers a global financial service firm.
American International Group, Inc. (AIG) (NYSE: AIG) is a major American insurance corporation. On September 16, 2008. AIG suffered a liquidity crisis, the United States Federal Reserve stepped in to prevent financial collapse of the company. The Fed announced the creation of a credit facility (at an interest rate of 8.50 percent over the three-month London Interbank Offered Rate (LIBOR)) of up to US$85 billion. It was also removed from the DOWJONES on the 18th of September 2008.
In the same week, 2 of the major and the oldest financial firms and the 18th largest insurance firm have failed. This news has been worrying the investors all around the globe.
However the Indian finance minister stated yesterday that we’re quite insolated and that the American crisis won’t really affect the banking sector of India as the banks are very well regulated. After his speech the market went ahead and closed 52 points on the upper side.
At 10:15 AM EST on the 18th of September. George. W. Bush, the president of America made a speech which made both the DOWJONES and the NASDAQ [Two of the major exchanges of America] close in the green.
A good piece of information is that Lehman’s last quarter results were good and they gifted 22 million dollars to their CEO. Which basically means that their annual reports and balance sheets were fake! A huge company like Lehman cannot be bankrupt in one quarter.
But the question which really made the markets come down was “If a big company like Lehman Brothers can have manipulated annual reports and balance sheets what about the small financial firm I have invested in?” Even in India where on the day of the Lehman Brother news the market was down by over 650 points at some point of the day.
However some analysts do believe that this was more to do with Merrill selling the stocks on companies which they have invested in since about 3 months. However all the markets need is some sensitive news and it comes crumbling down, like during a war or during the rise of inflation. And the reason for that is the mindset of the people. The people get disturbed when such news comes out and they sell their shares [Many of them even if they are making a huge loss] because they get scared that tomorrow they might wake up and the stock market would be wiped out and that has happened before.
People are blaming the finance minister of India saying that the banks here are not throughly regulated. Recently there was some news coming in about major shareholders of ICICI selling their stock, this includes the CEO, the directors etc. However this news was rubbished by the bank and it was called a “Rumor to bring the bank down”
The Finance Minister however sticks to his “Everything is fine. RBI is on top of this” statement.
As the Wall Street buzzes again, everyone has a doubt on who’s the next firm to fall.
P.S- Over 1500 jobs were lost in India overnight as Lehman filed for bankruptcy and this is not the end of it. The American Recession is under way and it’s gonna be huge ;)
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One Response to “Analysis: Lehman and The World”
Bush is a fuckster and all these firms had a pact. They all wanted to fuck the world so bad that they decided to go about filing bankruptcy in the same week.
Crude is getting fucked by America these days. The Gulf will soon sell oil at a cheaper rate because America has reserves of oil. It’s all good business.
As the Bush administration comes to an end, I look back and see how America was really a genuine country back in the day. He fucked it up. MOTHERFUCKER :@
Sorry for rating, I’m an American but I have been canceled for an American visa because my mom was an Indian. WTF? XD
By Steve Belmont on Sep 19, 2008