Financial (Band) Aid
Today we learnt of the collapse of that great financial institution, Lehman Bros. I say institution because apparently they have been around in some sort of shape or form since the civil war.
Yes, today, Lehman Bros. filed for Chapter 11 bankruptcy.
News reports in New York tonight have been treating this like some kind of national disaster, showing footage of (ex) Lehman Bros. employees leaving the building with all their deskly possessions in bags or under their arms. I can't say I feel sorry for these people. They gamble with other people's money. They got greedy. They lost.
With the exception of maybe the secretaries, I can't imagine that many people at Lehman Bros. get paid poorly. In fact, while they were telling all of their middle income clients to invest in index linked savings plans and portfolios of stocks - all of which have pretty much nosedived in the last year and lost their clients money, I'm sure most of these people still got paid handsomely. I'm also pretty sure they got a nice Christmas bonus - probably comparable to what some of us make in a year. If any of them were sensible, they stashed some of that money away for difficult times, such as now. I'm sure many of them aren't going to be homeless overnight.
Sorry if I sound unsympathetic but I have little or no time for banks or financial institutions. They play with our money, they charge us exorbitant interest rates, they are quick to whack us with charges when we go overdrawn (which I've never understood - how does that help me when I clearly have no money as it is?) and they loan each other money to keep each other afloat. Well finally their greed has come around to bite them in the ass. The tens of thousands of folks who find themselves in the misery of the sub-prime mortgage crisis and under the threat of foreclosure must see this as some kind of moral victory, as must those who have lost their jobs in the last year because of the economic downturn, despite being told repeatedly that the economy is strong. So, Lehman Bros. employees are now unemployed. Well, welcome to the party - pals!
Reports I have heard/read, put Lehman's debt at anywhere between 16 Billion and 618 Billion dollars. How is that acceptable? Don't you kind of scratch your head when you're a billion dollars in debt? Doesn't that set alarm bells ringing somewhere? Helloooooo?
Another thing that made me chuckle on the news tonight were analysts complaining about all the tax dollars New York was going to lose because of all these salaries that were no longer going to get paid. Come on! Seriously? You don't think the rest of us aren't going to pick up that tax burden? No, I think New York is going to be just fine.
Hot on the heels of this news is the news that Bank of America has just purchased Merrill Lynch for fear of them going the same way as Lehman Bros. (and Bear Stearns) Again, the financial institutions bale each other out. Honestly, this whole thing is like a house of cards waiting to come down and as I said before, I'm not sympathetic because the banks and lending institutions have allowed it to happen to themselves - they got greedy. They overstretched themselves in the sub-prime mortgage market and in real estate deals. They leant people more money than they could realistically afford (or pay back) and they gambled our money on stocks and shares, hoping that the Federal reserve would continue to bale out the economy with interest rate cuts and keep the stock market bouyant. They did all of this with little concern for the consequences should the market take a dive (even though the warning signs have been there for a long time). And now they get to reap what they sowed.
The sad thing is that the people that are going to bear the brunt of it are you and me.
Yes, today, Lehman Bros. filed for Chapter 11 bankruptcy.
News reports in New York tonight have been treating this like some kind of national disaster, showing footage of (ex) Lehman Bros. employees leaving the building with all their deskly possessions in bags or under their arms. I can't say I feel sorry for these people. They gamble with other people's money. They got greedy. They lost.
With the exception of maybe the secretaries, I can't imagine that many people at Lehman Bros. get paid poorly. In fact, while they were telling all of their middle income clients to invest in index linked savings plans and portfolios of stocks - all of which have pretty much nosedived in the last year and lost their clients money, I'm sure most of these people still got paid handsomely. I'm also pretty sure they got a nice Christmas bonus - probably comparable to what some of us make in a year. If any of them were sensible, they stashed some of that money away for difficult times, such as now. I'm sure many of them aren't going to be homeless overnight.
Sorry if I sound unsympathetic but I have little or no time for banks or financial institutions. They play with our money, they charge us exorbitant interest rates, they are quick to whack us with charges when we go overdrawn (which I've never understood - how does that help me when I clearly have no money as it is?) and they loan each other money to keep each other afloat. Well finally their greed has come around to bite them in the ass. The tens of thousands of folks who find themselves in the misery of the sub-prime mortgage crisis and under the threat of foreclosure must see this as some kind of moral victory, as must those who have lost their jobs in the last year because of the economic downturn, despite being told repeatedly that the economy is strong. So, Lehman Bros. employees are now unemployed. Well, welcome to the party - pals!
Reports I have heard/read, put Lehman's debt at anywhere between 16 Billion and 618 Billion dollars. How is that acceptable? Don't you kind of scratch your head when you're a billion dollars in debt? Doesn't that set alarm bells ringing somewhere? Helloooooo?
Another thing that made me chuckle on the news tonight were analysts complaining about all the tax dollars New York was going to lose because of all these salaries that were no longer going to get paid. Come on! Seriously? You don't think the rest of us aren't going to pick up that tax burden? No, I think New York is going to be just fine.
Hot on the heels of this news is the news that Bank of America has just purchased Merrill Lynch for fear of them going the same way as Lehman Bros. (and Bear Stearns) Again, the financial institutions bale each other out. Honestly, this whole thing is like a house of cards waiting to come down and as I said before, I'm not sympathetic because the banks and lending institutions have allowed it to happen to themselves - they got greedy. They overstretched themselves in the sub-prime mortgage market and in real estate deals. They leant people more money than they could realistically afford (or pay back) and they gambled our money on stocks and shares, hoping that the Federal reserve would continue to bale out the economy with interest rate cuts and keep the stock market bouyant. They did all of this with little concern for the consequences should the market take a dive (even though the warning signs have been there for a long time). And now they get to reap what they sowed.
The sad thing is that the people that are going to bear the brunt of it are you and me.
Labels: financial, Lehman Brothers, money
posted by An Englishman in New York at 1:46 AM
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