Monday, December 29, 2008

Lehman Chiefs Destroyed $109 Billion

The top executives of Lehman Brothers destroyed as much as $US75 billion ($109 billion [Australian]) of the company's value by rushing the stricken investment bank into a surprise bankruptcy filing, an analysis by Lehman's liquidators has found.

by Christine Seib - December 30, 2008 - The Australian Business

Most of the loss of value occurred because the bankruptcy filing caused the bank to default on trading contracts with counterparties, immediately cancelling 900,000 separate derivatives contracts. These cancellations included contracts in which Lehman was owed money. If there had been on orderly unwinding of the contracts over several weeks, at least $US50 billion could have been saved, the liquidators found.

This article goes on to explain that the fire sale price of some assets that had regularly generated $4US billion in annual revenue brought in only $500US million as a selling price.

Anyone not aware of the real consequences of declaring a crisis probably do not realize the total disaster the inarticulate retard (George W. Bush) and Henry Paulson created here in America with their insane handling of the banking crisis. American stockholders lost trillions of dollars due to the stupidity of George W. Bush and his Treasury Secretary.

The entire fiasco is reminiscent of the Savings and Loan crisis, where government ordered the S&L industry to divest itself of what were called junk bonds. The S&Ls thus lost hundreds of billions of dollars in the fire sale of these bonds, receiving only a minor fraction of their value. Since of course, like Lehman Brothers above, the underlying assets were worth much more than was received. An orderly, not panic stricken, handling of the S&L crisis would have discovered that only a small percentage of the bonds would not be paid off. The people who bought the junk bonds made billions off them because they were worth so much more than their fire sales value. The government then tried to sue the buyers, who bought the bonds in honest sales that the government forced, for daring to make money off the stupidity of the government forcing the sale.

The book has not been written yet, but there is an intelligent economist out there who will write it, calculating the value of assets that George W. Bush wiped out with his panicked declaration of the banking crisis. Another crisis was the stupidity of conservatives who bought his socialism based "compassionate conservative" lies in the first place.

The banking crisis was handled as stupidly as the way Lehman Brothers was handled. Thank you George W. Bush. You proved you are an inarticulate retard to the very end.


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