Lehman Brothers Quotes

I presumably lost $150,000 in the depression of 1937—on my one stock investment—because I did everything Lehman Brothers told me. I said, well, this is a fool’s procedure . . . buying stock in other people’s businesses.

Who, in 2007, would have thought that a drawing by Willem De Kooning would be a safer asset than shares in Lehman Brothers? By autumn 2008, this would clearly be the case.

Lehman Brothers’ Repo 105 program—which temporarily moved billions of dollars of liability off the bank’s books at the end of each quarter and replaced them a few days later at the start of the next quarter—was intentionally designed to hide the firm’s financial weaknesses. This was a carefully crafted fraud, detailed by a court-appointed Lehman examiner. But no former Lehman executive ever faced criminal prosecution for it. Contrast this with the fact that a teenager who sells an ounce of marijuana can be put away for years.

The problem wasn’t that Lehman Brothers had been allowed to fail. The problem was that Lehman Brothers had been allowed to succeed.

It may be satisfying to castigate the likes of Geithner and the heads of Lehman Brothers and AIG, but safety experts like Perrow know it is far more productive to design better systems than to hope for better people.

It’s easy to imagine a young person asking his parents if he should go to work for a startup and being told, “Don’t. It’s too risky. Get a job in a nice, safe company that will be around a long time—like Lehman Brothers, Arthur Andersen, or Enron.

The first of the brothers to leave their home in search of fortune was Henry, then twenty-three and the oldest. Henry settled in this city of 4,000 citizens and 2,000 slaves. His two brothers soon followed, and in 1850 they established a trading and dry-goods business called Lehman Brothers.

No matter whom the people elect, you always get JP Morgan and Goldman Sachs in charge. the shit going on is unbelievable. all to save massively overpriced assets.

When Lehman Brothers collapsed on September 15, 2008, and inaugurated the biggest crisis since the 1930s, there were no real alternatives to hand. No one had laid the groundwork. For years, intellectuals, journalists, and politicians had all firmly maintained that we’d reached the end of the age of “big narratives” and that it was time to trade in ideologies for pragmatism. Naturally, we should still take pride in the liberty that generations before us fought for and won. But the question is, what is the value of free speech when we no longer have anything worthwhile to say? What’s the point of freedom of association when we no longer feel any sense of affiliation? What purpose does freedom of religion serve when we no longer believe in anything?

Not at Lehman Brothers, which collapsed in 2008, and not on Wall Street; Greece was where the fire broke out. One heard the word contamination again and again, but this time it was no imperial cultural contamination, no creeping process of civilization. This time the crisis was a contagion: debts and obligations that would never be repaid, a gradual deterioration of the financial immune system.

Robert Lehman—who often told his partners, “I bet on people”—made Lehman the driving financial force behind RCA and the birth of television, TWA, Pan Am, Hertz, several Hollywood studios, and various department store and oil and rubber giants. Lehman Brothers was at the epicenter of those business forces that have shaped not just the American economy but the American culture as well. By 1967 the House of Lehman was responsible for $3.5 billion in underwriting. In volume, Lehman was among the top four investment banks.

But there’s a difference between an old-fashioned financial panic and what had happened on Wall Street in 2008. In an old-fashioned panic, perception creates its own reality: Someone shouts “Fire!” in a crowded theater and the audience crushes each other to death in its rush for the exits. On Wall Street in 2008 the reality finally overwhelmed perceptions: A crowded theater burned down with a lot of people still in their seats. Every major firm on Wall Street was either bankrupt or fatally intertwined with a bankrupt system. The problem wasn’t that Lehman Brothers had been allowed to fail. The problem was that Lehman Brothers had been allowed to succeed. This

KEYNESIAN ECONOMICS AND STIMULUS Keynesian economics is based on the notion that unemployment arises when total or aggregate demand in an economy falls short of the economy’s ability to supply goods and services. When products go unsold, jobs are lost. Aggregate demand, in turn, comes from two sources: the private sector (which is the majority) and the government. At times, aggregate demand is too buoyant—goods fly off the shelves and labor is in great demand—and we get rising inflation. At other times, aggregate demand is inadequate—goods are hard to sell and jobs are hard to find. In those cases, Keynes argued in the 1930s, governments can boost employment by cutting interest rates (what we now call looser monetary policy), raising their own spending, or cutting people’s taxes (what we now call looser fiscal policy). By the same logic, when there is too much demand, governments can fight actual or incipient inflation by raising interest rates (tightening monetary policy), increasing taxes, or reducing its own spending (thus tightening fiscal policy). That’s part of standard Keynesian economics, too, although Keynes, writing during the Great Depression, did not emphasize it. Setting aside the underlying theory, the central Keynesian policy idea is that the government can—and, Keynes argued, should—act as a kind of balance wheel, stimulating aggregate demand when it’s too weak and restraining aggregate demand when it’s too strong. For decades, American economists took for granted that most of that job should and would be done by monetary policy. Fiscal policy, they thought, was too slow, too cumbersome, and too political. And in the months after the Lehman Brothers failure, the Federal Reserve did, indeed, pull out all the stops—while fiscal policy did nothing. But what happens when, as was more or less the case by December 2008, the central bank has done almost everything it can, and yet the economy is still sinking? That’s why eyes started turning toward Congress and the president—that is, toward fiscal stimulus—after the 2008 election.

Between 2003 and 2008, Iceland’s three main banks, Glitnir, Kaupthing and Landsbanki, borrowed over $140 billion, a figure equal to ten times the country’s GDP, dwarfing its central bank’s $2.5 billion reserves. A handful of entrepreneurs, egged on by their then government, embarked on an unprecedented international spending binge, buying everything from Danish department stores to West Ham Football Club, while a sizeable proportion of the rest of the adult population enthusiastically embraced the kind of cockamamie financial strategies usually only mooted in Nigerian spam emails – taking out loans in Japanese Yen, for example, or mortgaging their houses in Swiss francs. One minute the Icelanders were up to their waists in fish guts, the next they they were weighing up the options lists on their new Porsche Cayennes. The tales of un-Nordic excess are legion: Elton John was flown in to sing one song at a birthday party; private jets were booked like they were taxis; people thought nothing of spending £5,000 on bottles of single malt whisky, or £100,000 on hunting weekends in the English countryside. The chief executive of the London arm of Kaupthing hired the Natural History Museum for a party, with Tom Jones providing the entertainment, and, by all accounts, Reykjavik’s actual snow was augmented by a blizzard of the Colombian variety. The collapse of Lehman Brothers in late 2008 exposed Iceland’s debts which, at one point, were said to be around 850 per cent of GDP (compared with the US’s 350 per cent), and set off a chain reaction which resulted in the krona plummeting to almost half its value. By this stage Iceland’s banks were lending money to their own shareholders so that they could buy shares in . . . those very same Icelandic banks. I am no Paul Krugman, but even I can see that this was hardly a sustainable business model. The government didn’t have the money to cover its banks’ debts. It was forced to withdraw the krona from currency markets and accept loans totalling £4 billion from the IMF, and from other countries. Even the little Faroe Islands forked out £33 million, which must have been especially humiliating for the Icelanders. Interest rates peaked at 18 per cent. The stock market dropped 77 per cent; inflation hit 20 per cent; and the krona dropped 80 per cent. Depending who you listen to, the country’s total debt ended up somewhere between £13 billion and £63 billion, or, to put it another way, anything from £38,000 to £210,000 for each and every Icelander.

Özgün (otantik) liderler, içi dışı bir olan ve üstlendiği misyonu gerçekleştirirken ilkelerinden ve ahlak anlayışından taviz vermeyen liderlerdir. Otantik liderler, statü ayrıcalıklarına ihtiyaç duymazlar; kendilerini oldukları gibi ifade ederler. Otantik liderlik, samimiyet, sahicilik ve doğallık üzerine kuruludur. Bu liderler etraflarında tek tip, kendilerini onaylayan insanlar bulundurmak yerine yaratıcı fikirleri olan insanları barındırmayı ve çeşitlilik içeren bir ortamda ahenge ulaşmayı hedeflerler. Otantik liderler ilişkilerini güven, sevgi ve hoşgörü üzerine inşa ederler. Otantik liderler, egolarını sergilemeye meraklı değildirler. Aksine hayata ve kendilerine daha sakin bir gözle bakan, bireysel dönüşümlerini gerçekleştirmiş insanlardır. Samimi ve içten olmaları, kendileriyle barışık olmalarındandır. Bu nedenle otantik liderler en çok kendilerine benzerler. Otantik liderler, çevrelerindeki insanların kendi yollarını bulmalarına destek olurlar. Herkesi “tek tip” bir kalıba sokmak yerine, insanların içindeki hapsolmuş enerjiyi ateşleyerek onların “kendileri olmalarına” imkan verirler. Fred Walumbwa, William Gardner ve Bruce Avalio otantik liderliği 4 farklı ama birbiriyle bağlantılı bileşen etrafında tarif ediyorlar: 1- Farkındalık: Otantik liderler kendileriyle barışıktırlar. Kendilerini iyi tanırlar. Duygularının, motivasyonlarının farkındadırlar. Zaaflarını, zafiyetlerini de en az güçlü yanları kadar iyi bilirler. Kendileriyle samimi ve dürüst bir ilişkileri vardır. Bundan dolayı da sahicilik, samimiyet ve güvenilirlik onların karakterlerinin en belirgin özellikleridir. Bu içselleştirilmiş kendine güven duygusu, onların çevresindeki insanlarla da olumlu ilişkiler kurmalarında son derece önemli bir rol oynar. Kendilerini tanıma, anlama ve geliştirme yolunda verdikleri emek sayesinde başkalarının da gelişimine saygı duymayı ve gerektiğinde hoşgörülü olmayı da bilirler. 2- Tarafsız düşünebilme: Otantik liderler karar alırken herkesi dinler ve bütün bilgileri analiz ederler. Adam kayırmazlar, herkese eşit mesafede dururlar. Kimi zaman kendi aleyhlerine bile olacak olsa tarafsızlıktan, evrensel ilkelere dayanarak karar almaktan taviz vermezler. Tarafsızlık onların güvenilirliğini pekiştirir, etkilerini artırır. Tarafsız oldukları için, aldıkları kararları onaylamayan insanlar bile onlara saygı ve güven duyarlar. 3- İçselleştirilmiş ahlak anlayışı: Otantik liderlerin üst düzey ahlaki standartları vardır. Karar alırken evrensel insani değerlerden hareket ederler. Olayları ve insanları ilkeli ve ahlaki bir süzgeçle değerlendirir, vicdanlarını dinleyerek karar alırlar. Kriterleri, başkalarının ne düşüneceği değil, sahip oldukları değerlerdir. Otantik liderlerin ahlak standartları kendi vicdanlarında saklıdır. 4-İlişkilerde şeffaflık: Otantik liderler kendi düşüncelerini ve duygularını ifade ederken şeffaf davranırlar. Bir şeyleri saklamak, gizli ajandalarla davranmak, insanları maniple etmek, kapalı kapılar arkasında iş çevirmek gibi huyları yoktur. Otantik liderler kurdukları ilişkilerde şeffaf davrandıkları için güven telkin ederler ve kendileri de başkalarına güvenerek ilişki kurarlar. Bu sebeple de hatalarını kabul etmekte, özür dilemekte ve telafi etmekte hiç zorlanmazlar. Harvard Business School profesörlerinden Bill George, bugüne kadar liderlerin çoğunun otantik liderlik ilkelerine odaklanmamasının, dünyayı krize sokan temel faktörlerin başında geldiğini söyler. Hatta Lehman Brothers, Goldman Sachs gibi devlerin çöküşünün sadece ekonomik nedenlere dayanmadığını, “karizmatik” diye adlandırılan lider tipinin bu şirketlerin batmasında önemli rol oynadığını savunur. Bugün hepimiz biliyoruz ki bu liderler, bilgi ve beceri konusunda eksiği olan liderler d

would the Volcker amendment, had it been law in 2007, have prevented the 2008 financial crisis? The financial crisis was caused by the overleveraging of real estate-related securities in Bear Stearns and Lehman Brothers, which were investment banks and would not have fallen under the purview of the Volcker amendment. Nor would it have applied to the insurance giant AIG, which the Fed chose to save after seeing the turmoil unleashed by the Lehman bankruptcy. Furthermore, banks that obtained loans from the Fed, specifically Citibank and Bank of America, ran into trouble because of bad real estate loans, not proprietary trading. Given this history, it is dubious that the Volcker amendment, had it been in effect in 2007, would have changed the course of the financial crisis.

WHY IT HAS TO CHANGE Why should this time be different? Bringing Leviathan under control will be the heart of global politics because of a confluence of three forces: failure, competition, and opportunity. The West has to change because it is going broke. The emerging world needs to reform to keep forging ahead. There is a global contest, but one based on promise as much as fear: Government can be done better. Debt and demography mean that government in the rich world has to change. Even before Lehman Brothers collapsed, Western governments were spending more than they raised. The U.S. government has run a surplus only five times since 1960; France has not had one since 1974–75. The crunch has

As a trader, I would learn that liquidity disappears when the market receives news that it doesn’t understand. Nobody wants to trade. Bids and offers vanish.

Rules are for the stupid, the clueless, those who cannot be trusted to do the right thing.

by the end of 2007, capital levels at the five SEC-regulated Wall Street investment banks—Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley, and Goldman Sachs—were just 3 percent of assets. At the mortgage giants Fannie Mae and Freddie Mac, they would drop to barely 1 percent of the assets they owned and guaranteed.

One of Arvind Kejriwal’s many NGOs is generously funded by the Ford Foundation. Kiran Bedi’s NGO is funded by Coca-Cola and Lehman Brothers.

gamble in a wartime prison camp should serve as an example to the staff of the World Bank today. We’ll discover what the disasters at Three Mile Island and Deepwater Horizon have to tell us about preventing another Lehman Brothers crisis. We’ll learn from a watchmaker,

Larry Kudlow hosted a business talk show on CNBC and is a widely published pundit, but he got his start as an economist in the Reagan administration and later worked with Art Laffer, the economist whose theories were the cornerstone of Ronald Reagan’s economic policies. Kudlow’s one Big Idea is supply-side economics. When President George W. Bush followed the supply-side prescription by enacting substantial tax cuts, Kudlow was certain an economic boom of equal magnitude would follow. He dubbed it “the Bush boom.” Reality fell short: growth and job creation were positive but somewhat disappointing relative to the long-term average and particularly in comparison to that of the Clinton era, which began with a substantial tax hike. But Kudlow stuck to his guns and insisted, year after year, that the “Bush boom” was happening as forecast, even if commentators hadn’t noticed. He called it “the biggest story never told.” In December 2007, months after the first rumblings of the financial crisis had been felt, the economy looked shaky, and many observers worried a recession was coming, or had even arrived, Kudlow was optimistic. “There is no recession,” he wrote. “In fact, we are about to enter the seventh consecutive year of the Bush boom.”19 The National Bureau of Economic Research later designated December 2007 as the official start of the Great Recession of 2007–9. As the months passed, the economy weakened and worries grew, but Kudlow did not budge. There is no recession and there will be no recession, he insisted. When the White House said the same in April 2008, Kudlow wrote, “President George W. Bush may turn out to be the top economic forecaster in the country.”20 Through the spring and into summer, the economy worsened but Kudlow denied it. “We are in a mental recession, not an actual recession,”21 he wrote, a theme he kept repeating until September 15, when Lehman Brothers filed for bankruptcy, Wall Street was thrown into chaos, the global financial system froze, and people the world over felt like passengers in a plunging jet, eyes wide, fingers digging into armrests. How could Kudlow be so consistently wrong? Like all of us, hedgehog forecasters first see things from the tip-of-your-nose perspective. That’s natural enough. But the hedgehog also “knows one big thing,” the Big Idea he uses over and over when trying to figure out what will happen next. Think of that Big Idea like a pair of glasses that the hedgehog never takes off. The hedgehog sees everything through those glasses. And they aren’t ordinary glasses. They’re green-tinted glasses—like the glasses that visitors to the Emerald City were required to wear in L. Frank Baum’s The Wonderful Wizard of Oz. Now, wearing green-tinted glasses may sometimes be helpful, in that they accentuate something real that might otherwise be overlooked. Maybe there is just a trace of green in a tablecloth that a naked eye might miss, or a subtle shade of green in running water. But far more often, green-tinted glasses distort reality. Everywhere you look, you see green, whether it’s there or not. And very often, it’s not. The Emerald City wasn’t even emerald in the fable. People only thought it was because they were forced to wear green-tinted glasses! So the hedgehog’s one Big Idea doesn’t improve his foresight. It distorts it. And more information doesn’t help because it’s all seen through the same tinted glasses. It may increase the hedgehog’s confidence, but not his accuracy. That’s a bad combination.

What went wrong? Well, comrades, when the American investment bank Lehman Brothers collapsed, it was not just a bank going broke, it was a political ideology going bankrupt. The failure of market liberalism. It ended decades of naive, uncritical faith in the market looking after itself. It does not!

(Note: Lehman Brothers was a very strong bank until it wasn’t! This is why many experts utilize Canadian banks, since they tend to have the strongest financials.)

John Cartier: The sound was so deafening. Michele Cartier, Lehman Brothers, North Tower, 40th floor: This high-pitched sound, and I didn’t know what that was, but it was so eerie, like your fingernails-on-a-chalkboard type of thing. Bruno Dellinger, principal, Quint Amasis North America, North Tower, 47th floor: I heard a sound that today I cannot remember. It was so powerful, such a huge sound that I blocked it. It scared me to death. I blocked it, and I cannot bring it back up to consciousness. Howard Lutnick, CEO, Cantor Fitzgerald, North Tower: The loudest sound I’d ever heard. Gregory Fried, executive chief surgeon, NYPD: I can’t even give you an analogy.

The U.S. government’s Thrift Savings Plan, developed for the country’s civilian and military employees, serves as a possible model. At the end of 2003, the plan contained $128.8 billion in assets distributed across five funds. Four of the funds track well-known indices, namely the large-capitalization-stock S&P 500 Index, the small-capitalization-stock Wilshire 4500 Index, the developed-foreign-stock MSCI EAFE Index and the broadly inclusive domestic bond Lehman Brothers U.S. Aggregate Index. From a security selection perspective, the U.S. government protects its employees from playing the negative-sum game of active management.

From August to October 2008, an unprecedented series of changes occurred: Bitcoin.org was registered, Lehman Brothers filed for the largest bankruptcy in American history, Bank of America bought Merrill Lynch for $50 billion, the U.S. government established the $700 billion Troubled Asset Relief Program (TARP), and Satoshi Nakamoto published a paper that founded Bitcoin and the basis of blockchain technology.

In The End of Jobs, Taylor Pearson calls this The Turkey Problem, inspired by a clever analogy found in Nassim Taleb’s Black Swan. Taleb writes: “Consider a turkey that is fed every day. Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests,’ as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.” Bye-bye Mr. Turkey. The turkey thinks he’s safe, until he realizes at the last minute that he’s not. We tend to believe that working at big corporations keeps us safe. But in reality, it’s the job of the HR department to make you feel that way, even if it’s not true. Every day you work at a large corporation, you’re building up silent risk. One day, you might realize you’re a turkey. Do you remember a company called Lehman Brothers? I know it’s a distant memory for some, but before 2008 it was the 4th largest investment bank in the United States. Then it went bankrupt. Bye-bye.

When Lehman Brothers collapsed on September 15, 2008, and inaugurated the biggest crisis since the 1930s, there were no real alternatives to hand. No one had laid the groundwork. For years, intellectuals, journalists, and politicians had all firmly maintained that we’d reached the end of the age of “big narratives” and that it was time to trade in ideologies for pragmatism. Naturally, we should still take pride in the liberty that generations before us fought for and won. But the question is, what is the value of free speech when we no longer have anything worthwhile to say? What’s the point of freedom of association when we no longer feel any sense of affiliation? What purpose does freedom of religion serve when we no longer believe in anything? On the one hand, the world is still getting richer, safer, and healthier. Every day, more and more people are arriving in Cockaigne. That’s a huge triumph. On the other hand, it’s high time that we, the inhabitants of the Land of Plenty, staked out a new utopia. Let’s rehoist the sails. “Progress is the realisation of Utopias,” Oscar Wilde wrote many years ago.24 A fifteen-hour workweek, universal basic income, and a world without borders … They’re all crazy dreams – but for how much longer?

Old Guard” names of German Jewish finance—with the exception of the Guggenheims—had migrated to New York City. Familiar on the streets of downtown Manhattan were the two Lehman brothers, prospering as cotton brokers. Marcus Goldman, with bits of commercial paper filling out the lining of his tall silk hat, was still a one-man operation. Two Strauses, Lazarus and son Isidor, who, like the Seligmans and Lehmans, had been peddlers and small shopowners in the prewar South, had moved to New

Tuesday afternoon, the fund announced: “The value of the debt securities issued by Lehman Brothers Holdings, Inc.… and held by the Primary Fund has been valued at zero effective 4:00PM New York time today. As a result, the NAV [net asset value] of the Primary Fund, effective as of 4:00PM, is $0.97 per share.” The Reserve Primary Fund had broken the buck. As the news spread, investors started pulling hundreds of billions of dollars from other money-market funds. To meet the redemptions, the funds had to sell their assets—including their commercial paper. But nobody wanted to buy commercial paper. Nobody wanted to lend, even to sound borrowers. “Suddenly GE and Caterpillar and Boeing were having trouble borrowing money to make payroll and pay suppliers.… Everybody is running from all forms of commercial paper,” a lawyer who worked at the New York Fed told me.

By the end of the next summer the illusion had been broken. In a free fall that began on a weekend in mid-September, Lehman Brothers would go on to lose 93 percent of its stock value. A company born out of a system that treated Black people as property died from self-inflicted wounds in the course of destroying the property of Black people.

The genius of the Wright brothers wasn’t to invent every necessary component from flight from scratch, it was to recognize that we were only a stepping stone away from flight given past innovations.

Others, having started by extending credit to customers, evolved into America’s first investment banks. Lehman Brothers, founded by Henry Lehman, a Jewish immigrant from Bavaria, began as a dry goods store in Montgomery, Alabama, in 1844. Lazard Frères, founded by three Jewish brothers from France, began as a wholesale business in New Orleans in 1848.

On Monday, Lehman Brothers had filed for bankruptcy, and Merrill Lynch, having announced $55.2 billion in losses on subprime bond–backed CDOs, had sold itself to Bank of America. The U.S. stock market had fallen by more than it had since the first day of trading after the attack on the World Trade Center. On Tuesday the U.S. Federal Reserve announced that it had lent $85 billion to the insurance company AIG, to pay off the losses on the subprime credit default swaps AIG had sold to Wall Street banks—the biggest of which was the $13.9 billion AIG owed to Goldman Sachs. When you added in the $8.4 billion in cash AIG had already forked over to Goldman in collateral, you saw that Goldman had transferred more than $20 billion in subprime mortgage bond risk into the insurance company, which was in one way or another being covered by the U.S. taxpayer.

In the early 1920s, Lee Higginson was one of the most prestigious and profitable banks in the world – just behind J. P. Morgan but ahead of Goldman Sachs and Lehman Brothers. The firm’s roots were in Boston, not New York, yet even as America’s financial business shifted from State Street to Wall Street during the early twentieth century, Lee Higginson remained one of a handful of global “money banks.

I think what’s occurring is a stealthy rebranding: the word ‘problem’ has become too emotionally loaded to be uttered in polite company in case we think bad things about the companies responsible. So software bugs are now issues rather than problems, even if they stop our computers working and ruin our day. Or, for my CEO, the bug is an opportunity. He was in the software business, and the only opportunity a broken computer gives you is the opportunity to wait for tech support to call back. We now have ‘performance issues’ with staff who fall asleep on their keyboard, or ‘brand issues’ with companies that nobody likes, or, worst of all, ‘balance sheet issues’, as described by Lehman Brothers, shortly before it ceased to be Lehman Brothers. At least they didn’t call it a ‘balance sheet opportunity’, though I bet someone suggested it. Rule of thumb on issues: it doesn’t matter whether your company admits to balance sheet issues or problems, it still might be time to send out your CV.

and I never once considered that it was appropriate to put taxpayer money on the line with . . . in resolving Lehman Brothers.

2. Don’t trade penny stocks. A penny stock is any stock that trades under $5. Unless you are an advanced trader, you should avoid all penny stocks. I would extend this by encouraging you to also avoid all stocks priced under $10. Even if you have a small trading account ($5,000) or less, you are better off buying fewer shares of a higher-priced stock than a lot of shares of a penny stock. That is because low-priced stocks are most often associated with lower quality companies. As a result, they are not usually allowed to trade on the NYSE or the Nasdaq. Instead, they trade on the OTCBB ("over the counter bulletin board") or Pink Sheets, both of which have much less stringent financial reporting requirements than the major exchanges do. Many of these companies have never made a profit. They may be frauds or shell companies that are designed solely to enrich management and other insiders. They may also include former “blue chips” that have fallen on hard times like Eastman Kodak or Lehman Brothers. In addition, penny stocks are inherently more volatile than higher-priced stocks. Think of it this way: if a $100 stock moves $1, that is a 1% move. If a $5 stock moves $1, that is a 20% move. Many new traders underestimate the kind of emotional and financial damage that this kind of volatility can cause. In my experience, penny stocks do not trend nearly as well as higher-priced stocks. They tend to be more mean-reverting (Mean reversion occurs when a stock moves up sharply from its average trading price, only to fall right back down again to its average trading price). Many of them are eventually headed to zero, but they are still not good short candidates. Most brokers will not let you short them. And even if you do find a broker who will let you short a penny stock, how would you like to wake up to see your penny stock trading at $10 when you just shorted it at $2 a few days before? I learned that lesson the hard way. It turned out that I was risking $8 to make $2, which is not a good way to make money over the long term. To add injury to insult, a penny stock might appear to be liquid one day, and the next day, the liquidity dries up and you are confronted by a $2 bid/ask spread. Or the bid might completely disappear. Imagine owning

En otro artículo del New York Times, Erin Callan, ex directora de finanzas de Lehman Brothers, cuenta la historia de cómo “en una fiesta de la oficina, en 2005, una de mis colegas le preguntó al que entonces era mi marido qué hacía yo los fines de semana. Ella me consideraba una persona intensa y llena de energía. ‘¿Hace kayak, escala y luego corre medio maratón?’, dijo en broma. No, dijo él con simplicidad, ‘duerme’. Y era cierto. Cuando no estaba poniéndome al corriente con el trabajo, pasaba el fin de semana recargando las baterías para la semana siguiente.”[5

In the bar, there was some disagreement over how the trouble had started, for all the newspapers seemed to tell them different things. Some of the customers maintained that it had begun with two rich Americans, Freddie and Fannie, others that it had started with two brothers called Lehman, still others that it was something to do with a city called Northern Rock.

A now-classic example of the failure of this sort of HFT took place in September 2008 when the investment bank Lehman Brothers (ticker: LEH, now delisted after bankruptcy), Federal Home Loan Mortgage Corp (ticker: FRE), and many other mortgage holdings and investment banks all suffered a massive drop in price. Programs tried to buy their already broken stock to squeeze and burn the short sellers, but the stock price never went higher. Day traders and huge institutional sellers dumped their shares on the program. The programs and their developers were obliterated and left holding huge quantities of worthless shares of LEH and FRE, as well as other bankrupted holdings.

Steve Schwarzman, a thirty-one-year-old investment banker at Lehman Brothers Kuhn Loeb at the time, burned with curiosity to know how the deal worked. The buyers, he saw, were putting up little capital of their own and didn’t have to pledge any of their own collateral. The only security for the loans came from the company itself. How could they do this? He had to get his hands on the bond prospectus, which would provide a detailed blueprint of the deal’s mechanics. Schwarzman, a mergers and acquisitions specialist with a self-assured swagger and a gift for bringing in new deals, had been made a partner at Lehman Brothers that very month. He sensed that something new was afoot—a way to make fantastic profits and a new outlet for his talents, a new calling.

Is China repeating the Lehman crash ? With more stellar listings of IPOs and many various new cryptos popping out of the blue with their interesting mechanism, and catchy names and their gains showing double, triple, and maybe quadruple the price, it's only understandable why…. Evergrande, a Chinese real estate developer, is having problems, which has led to comparisons to Lehman Brothers' collapse in 2008. Analysts don't believe that China's more tightly regulated financial system is about to experience a repeat of the outbreak that followed Lehman's collapse. But there is a significant connection between the two incidents: When a long-lasting mortgage bubble burst, Lehman failed. Evergrande is having the same trouble because China is attempting to move away from an economic growth model that greatly relies on debt, making the system more empty. Read the latest news about China’s investment and major players movements and its crypto related adversaries. China is not unique in its love of debt, but unlike the United States, it does not borrow to lower taxes or pay for social transfers. Instead, it makes investments in construction, infrastructure, and real estate. As long as the investment actually increases national productivity, the model makes sense. The debt followed by the property boom—and, as a result, its economic growth—has long been a source of concern for long-term investors. They aren’t alone: Chinese policymakers have been trying to tackle the debt in its economy—a reason they were much more restrained in providing Covid-related stimulus in 2020 and the reason for the property crackdown that sparked the current slump.

15, I was preoccupied with the GSEs and Lehman Brothers.

But I drew a distinction between our actions in March with Bear Stearns and now with Lehman Brothers.

They had already told Paulson privately that they had reduced most of their risk to Lehman Brothers,

There had always been a divide between the WASP houses and the Jewish houses on Wall Street. But firms such as Kuhn Loeb, Lehman Brothers, and J. W. Seligman represented “Our Crowd,” the German Jewish elite, and for all the anti-Semitic bigotries of old dinosaurs like Jack Morgan, these firms were held in very high regard and viewed as reputable and very prestigious institutions.

Value #1: Reality Huh? Isn’t every business based on reality? In fact, isn’t everything based on reality? Actually, no. Lehman Brothers, Bear Stearns, AIG (American International Group), IndyMac, Washington Mutual, Countrywide, and all the other banks that blew themselves to smithereens in 2008 weren’t basing their businesses on reality. They were basing their businesses on sheer fantasy, wish, and whim—and an unhealthy dose of greed, the most unrealistic thing of all. They believed the housing market would always go up. Credit markets would never be illiquid. People with no jobs could pay back their mortgages.

harting the rise of Lehman Brothers, one of Wall Street's greatest investment banking houses, essentially traces the gradual emergence of a powerful, industrial United States. Beginning as cotton brokers in an agricultural society, the first Lehmans to arrive in America helped finance the Confederacy during the Civil War, and then turned to Wall Street to dabble in commodities well into the 1900s.

Word went around the Lehman offices that Gallatin, who negotiated all of Lehman’s compensation, had been described to the American Express board by Robinson as a “man who enters revolving doors after me and somehow reaches the other side first.

Understandably, given public anger at bailouts, support had been gathering from both the right and the left for breaking up the largest institutions. There were also calls to reinstate the Depression-era Glass-Steagall law, which Congress had repealed in 1999. Glass-Steagall had prohibited the combination within a single firm of commercial banking (mortgage and business lending, for example) and investment banking (such as bond underwriting). The repeal of Glass-Steagall had opened the door to the creation of “financial supermarkets,” large and complex firms that offered both commercial and investment banking services. The lack of a new Glass-Steagall provision in the administration’s plan seemed to me particularly easy to defend. A Glass-Steagall–type statute would have offered little benefit during the crisis—and in fact would have prevented the acquisition of Bear Stearns by JPMorgan and of Merrill Lynch by Bank of America, steps that helped stabilize the two endangered investment banks. More importantly, most of the institutions that became emblematic of the crisis would have faced similar problems even if Glass-Steagall had remained in effect. Wachovia and Washington Mutual, by and large, got into trouble the same way banks had gotten into trouble for generations—by making bad loans. On the other hand, Bear Stearns and Lehman Brothers were traditional Wall Street investment firms with minimal involvement in commercial banking. Glass-Steagall would not have meaningfully changed the permissible activities of any of these firms. An exception, perhaps, was Citigroup—the banking, securities, and insurance conglomerate whose formation in 1998 had lent impetus to the repeal of Glass-Steagall. With that law still in place, Citi likely could not have become as large and complex as it did. I agreed with the administration’s decision not to revive Glass-Steagall. The decision not to propose breaking up some of the largest institutions seemed to me a closer call. The truth is that we don’t have a very good understanding of the economic benefits of size in banking. No doubt, the largest firms’ profitability is enhanced to some degree by their political influence and markets’ perception that the government will protect them from collapse, which gives them an advantage over smaller firms. And a firm’s size contributes to the risk that it poses to the financial system. But surely size also has a positive economic value—for example, in the ability of a large firm to offer a wide range of services or to operate at sufficient scale to efficiently serve global nonfinancial companies. Arbitrary limits on size would risk destroying that economic value while sending jobs and profits to foreign competitors. Moreover, the size of a financial firm is far from the only factor that determines whether it poses a systemic risk. For example, Bear Stearns, which was only a quarter the size of the firm that acquired it, JPMorgan Chase, wasn’t too big to fail; it was too interconnected to fail. And severe financial crises can occur even when most financial institutions are small.

By the mid-twenties, Philip’s son, Robert, began to assume principal responsibility for the partnership. He was a small, trim man, about five feet seven inches, with well-tanned, smooth skin and a dapper appearance. Unfailingly polite, Robert nevertheless knew what he wanted. First he wanted to move the firm. And in 1928 the headquarters of the partnership was transferred from a cramped space in the Farmers Loan & Trust Company building at 16 William Street to Lehman’s very own eleven-story triangular Italian Renaissance-style building at One William Street, in the heart of the financial district.* For the next fifty-two years this would be the home of Lehman Brothers.

In 2005 two thirds of the mortgages contained in Lehman’s issuance of $133 billion in MBS/CDO were sourced from its own subprime loan originators. A top Wall Street name was scraping the very bottom of the credit barrel.

while the world was looking elsewhere, Koch Industries built a financial trading desk that rivaled anything operated by Goldman Sachs or Lehman Brothers. Koch Industries, known for crude oil and natural gas, became a world leader in making and trading some of the most complex financial instruments in the world. Koch’s trading business was a strategic centerpiece of the company’s growth strategy over the next decade. It was also the most striking example of Koch’s ability to amass and exploit information asymmetries, learning more than everyone else and turning huge profits from this advantage. There were no markets more complex and more opaque than the trading markets born during the Bush administration, and Koch Industries mastered them.

Black rhinos survived for 8 million years before being killed off by poachers. Lehman Brothers adapted and prospered for 150 years and 33 recessions before it met its match in mortgage-backed securities. Poof, gone.