Posted on 09/15/2008 2:25:19 PM PDT by Winged Hussar
We literally feel our readers' pain for today's 504 point drop in the DJIA because of Lehman Brothers' impending collapse on the stock market, because it impacts our own investments. However, we will shed no tears for Lehman Brothers itself, and we are not particularly surprised that it is going south. Furthermore, even if Lehman Brothers disappears tomorrow, it will in no way affect the United States' remaining ability to create genuine wealth.
Henry Ford told us long ago that there are exactly three ways to create wealth: mine it, grow it, or make it, but Lehman Brothers apparently had the idea that it could create wealth (or at least enrich itself) by trading in carbon credits--an activity about as meritorious as speculation in baseball cards, coins, comic books, or tulip bulbs (ask the Dutch about the latter). The bubble eventually bursts (as it did with the dot-com stocks), and the chickens come home to roost. Lehman Brothers is a member of the Climate Action Partnership (CAP), whose agenda is to promote legislation to cap carbon dioxide emissions and then make money by trading in "carbon credits."
While this may not have been the direct cause of the company's troubles, it does point to a management attitude to the effect that one can have something for nothing. Lehman Brothers was under the impression that it could receive a subsidy for the financial equivalent of breathing, and that it did not have to actually do anything to earn an organizational living. It wanted corporate welfare in the form of government-mandated caps on carbon dioxide emissions so it could take a commission on trading in carbon credits. Per "Cap and Trade" by Kimberly Strassel
...As shown above, Lehman Brothers apparently expected to be paid for the financial equivalent of breathing.
(Excerpt) Read more at husaria.wordpress.com ...
While we certainly sympathize with the rank-and-file Lehman Brothers employees who may lose their jobs, and investors (including ourselves) who saw portfolio values drop today, we do not think Lehman Brothers' bankruptcy will be a real long term loss to the American economy.
http://www.freerepublic.com/focus/f-news/2082889/posts
"An enormous hoax has been perpetrated on global financial markets during the past 10 years. An American economy based on opening containers from China and selling the contents at Wal-Mart, or trading houses back and forth, provides scant profitability. ...Wall Street and the City of London rode an unprecedented wave of profitability by providing overpriced leverage to consumer and corporate markets. Led by the financial engineers at Lehman, the securities industry grew an enormous infrastructure of staff, systems, and financial exposure. They were so successful that when the music stopped, there was no way to liquidate this mechanism gracefully."
Exactly.
The CEO of Lehman Brothers is Richard Fuld. Just when will he be picked up and charged for his fine touch in this mess. It is reported he made out just fine. Accountable anyone?????????
I recall another day of market shock when Alan Greenspan, Mr. Andrea Mitchell, uttered the words
irrational exuberance
and caused the market to free fall.
This is not a day to gloat on any level at all.
People who had the public trust betrayed our country.
Lehman did create a lot of bond indexes that are used to gauge money managers. They also are used as ETF’s. Somebody will buy the rights to those indces. Other than that, when you net out the assets vs. liabilities there isn’t anything there.
No president, ceo or cfo of a disasterously failed investment house should ever be allowed to walk away with millions of dollars tucked into his/her parachute. Those parachutes should be cancelled outright and all of the failed company’s remaining assets should be divided equally among employees and shareholders. Those men/women at the top of such firms should be held financially accountable for the bonehead decisions that lead to disaster.
Lehman Brothers were big in the fraud of selling imaginary carbon credits:
This reminds me of the dot.com bust under the Clintoons when multi million and billion dollar companies disappeared because they never had a product to sell nor a profit.
You can't even hardly find a "notch" where that teensey weensey little dimple of a drop occurred when you look at the whole history of the DJIA!!!
Lehman Brothers was a 600 Billion failure, Enron was only 10% of that!!! No one is going to prison from a bankruptcy, but somebody from Freddie and Fanny sure should be!!!
Bailouts should be considered necessary because of criminal looting, most of it done by Democrats, especially during and immediately after the Clinton maladministration IMHO!!! (Like Jamie Gorelick!)
NY stocks are way down today. There’s a lot of fear there.
Like GlobalCrossing, for one!!!
Bailouts should be considered necessary because of criminal looting, most of it done by Democrats, especially during and immediately after the Clinton maladministration IMHO!!! (Like Jamie Gorelick!)
And we ain't seen little Robby Rubin's Citigroup take their coming hit yet. The Clinton wunderkinds make out like REAL Bandits.
Actually, the dot com bubble burst on March 10, 2000:
Thinning the herd
The technology-heavy NASDAQ Composite index peaked at 5,048 in March 2000, reflecting the high point of the dot-com bubble.Over 1999 and early 2000, the Federal Reserve had increased interest rates six times, and the runaway economy was beginning to lose speed. The dot-com bubble burst, numerically, on March 10, 2000, when the technology heavy NASDAQ Composite index[6] peaked at 5,048.62 (intra-day peak 5,132.52), more than double its value just a year before. The NASDAQ fell slightly after that, but this was attributed to correction by most market analysts; the actual reversal and subsequent bear market may have been triggered by the adverse findings of fact in the United States v. Microsoft case which was being heard in federal court. The findings, which declared Microsoft a monopoly, were widely expected in the weeks before their release on April 3.
One possible cause for the collapse of the NASDAQ (and all dotcoms) were massive, multi-billion dollar sell orders for major bellwether high tech stocks (Cisco, IBM, Dell, etc.) that happened by chance to be processed simultaneously on the Monday morning following the March 10 weekend. This selling resulted in the NASDAQ opening roughly four percentage points lower on Monday March 13 from 5,038 to 4,879—the greatest percentage ‘pre-market’ selloff for the entire year.
The massive initial batch of sell orders processed on Monday, March 13 triggered a chain reaction of selling that fed on itself as investors, funds, and institutions liquidated positions. In just three days the NASDAQ had lost nearly nine percent, falling from roughly 5,050 on March 10 to 4,580 on March 15.
Another reason may have been accelerated business spending in preparation for the Y2K switchover. Once New Year had passed without incident, businesses found themselves with all the equipment they needed for some time, and business spending quickly declined. This correlates quite closely to the peak of U.S. stock markets. The Dow Jones peaked on January 14, 2000 (closed at 11,722.98, with an intra-day peak of 11,750.28 and theoretical[7] peak of 11,908.50)[8] and the broader S&P 500 on March 24, 2000 (closed at 1,527.46, with an intra-day peak of 1,553.11);[9] while, even more dramatically the UK’s FTSE 100 Index peaked at 6,950.60 on the last day of trading in 1999 (December 30). Hiring freezes, layoffs, and consolidations followed in several industries, especially in the dot-com sector.
The bursting of the bubble may also have been related to the poor results of Internet retailers following the 1999 Christmas season. This was the first unequivocal and public evidence that the “Get Big Fast” Internet strategy was flawed for most companies. These retailers’ results were made public in March when annual and quarterly reports of public firms were released.
By 2001 the bubble was deflating at full speed. A majority of the dot-coms ceased trading after burning through their venture capital, many having never made a net profit. Investors often jokingly referred to these failed dot-coms as either “dot-bombs” or “dot-compost”.
Now in 2008, Lehman Brothers was a 600 Billion failure, Enron was only 10% of that!!!
Leverage, derivatives, carbon credits and fraud will be the hall marks of these liberal run so called businesses.
Citigroup will take several torpedoes up Robber Rubin’s butt before this is over.
Ohhhhh... That's riiiiiiiiiight!!! Plop, plop, fizzle, fizzle... Oh what a relief it is!!!
Man... We sure are livin through some "interesting times!!!"
With alla this punk-ast "leadership," pretty soon it'll be every man for himself! Except Mrs. Presidential Palin, of course...
Al Gore could not sell any carbon credits unless a big liberal corporation set up the scam/fraud transactions.
I would imagine that lehman was hated by many. The evidence seems to be nobody really seem upset they are gone
The issue this weekend was never about what would happen to Lehman, it had already failed. The issue was whether it would be sold to Barclays and thereby liquidated "with honor", paying *all* of its *debts* to its *creditors* (not shareholders) - or whether, instead, its creditors would be left to scramble over its corpse, facing unknown and huge future losses themselves, when Lehman can't pay.
Exactly this sort of moralizing drivel drove the Treasury to decide on the second of those courses. Which was a collosal blunder, as big as tightening the money supply in 1932. It blew apart instantly, and there is not arguing over it. We could have stopped the losses at Lehman for perhaps $30 billion in loan guarantees, most of which would have paid eventually, leaving net losses to taxpayers 3-5 years from now of less than $10 billion.
Instead you just caused several hundred billion dollars worth of damage. Yes you. And it isn't coming out of others hides and sparing the taxpayer or anything - the Fed had to inject $95 billion today so your bank could open its doors tomorrow. The Europeans had to inject $50 billion more. The non-bailout has already cost 5 times what the bailout could possibly have cost at the worst. And it hasn't stopped, on the contrary it is getting worse. AIG is left with a $70 billion hole in its balance sheet where payments due to it from Lehman on swaps used to be. It may fail by the end of the month, though private rescue efforts are ongoing.
Men have to stop playing political games over blame or who gets what portion of the losses, and instead focus exclusively on keeping the losses as small as possible. It is way, way past time to do so. The scale of the losses resulting from all of this are *not* fixed. If men fight over them and try to shift them onto each other, they will multiply 10 to 100 fold. I am not kinding. Without the institutions and the trust that let the system operate, you will all be immeasurably poorer, and no amount of moralizing about it will put the losses on others. It will come right to your door, 10 to 100 times as large as it ought to be.
This isn't a morality play and it isn't a game. It is possible to wreck capitalism for generations by reckless ideological drivel at this moment, and you all are doing your damnedest.
All economics tells us what needs to happen right now. The loss needs to be faced and allocated, not passed around in a game of hot potato or evaded or made into a political football. Everyone and I mean everyone needs to focus exclusively and I mean exclusively on keeping the total size of the loss down, and not repeat not engaging in this utterly destructive self indulgent ideological ranting.
Grow up people. You sound like the daily kos.
Once again you are obviously correctomundo. Lehman Bros were the enablers as were the ACORN Communutty Organizers who agitated electeds to write laws that also facilitated this abismal mess!!! Like Reverend Wright would have said: “No No No... G. D. Obama!!!”
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