It happened as expected. After a querter of uncertainty, Lehman Brothers filed for bankruptcy. What it means is that their assets are less valued than their liabilities and that they will not get fresh infusion of funding from its creditors(other Wall Street Banks). Now the next steps will be Court appointing an examiner, credit board, filing of all assets and liabilities and plan for reorganization etc. None of the really bring back a historical Wall Street firm. Too bad..
The other news is Meryl Lynch being bought over by BoA. Two major investment banks out of the Wall Street landscape over 1 week end. That is preceeded by Freddie and Fannie merger, and a quarter back Bear Sterns buyout. This is definitely a very crucial time for American (and also global) financial markets.
There will be important lessons that can be learnt from any event. If I predict correct, for this sub-prime mortogage crisis, it could be "Never be too greedy".
On the side note, one friend of mine told last monday that he bought Fannie Mae stock for 2K $ the Friday before the merger weekend. Another friend of friend bought 2.5 K $ worth of LB stock on last Friday. This is nothing but financial stupidity. During such hard year when market is unpredictable, when even pros are scared to trade, what made these amateurs go and buy such stock is greed. Dont fall for it. It is not worth it.
4 comments:
Its really sad to see Lehman Brothers folding. They offered me a job way back in 2001. Now, if I had taken it, none of this would have ever happened :D
Just kidding. Its sad that when hallowed institutions come to a sticky end.
You would have turned it around Priya. :-) It was gloomy day around here in NYC yesterday.
sad story of a legendary company. hope the market recovers soon.
Correct Sukumar. This is going to have serious ripple effect. My aunt who works for a competitor company of AIG just told that they will not let AIG go down. Hope they will do that.
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