“Life’s not fair, is it.” James Earl Jones in The Lion King
2008 was a bad year for Lehman Brothers. It was also the last year for them. Their bankruptcy has been blamed for causing the entire recession and/or depression (your choice), making them the first domino of the worldwide financial crisis.
Who Pushed The Domino?
If Lehman was so central to the US financial system, why was the firm left to die? In the triage of bailout they were tagged as “too small and sound to save,” according to The Spoof, a news site specializing in satire and parody. It’s fiction but my enemies tell me that many a true word has been said in jest.
Overall Business Practices Were Too Sound
“Negotiations broke down between Lehman Brother representatives and that of the feds for a federal bailout when the accounting books disclosed that Lehman Bothers did not qualify under the Bush’s “Too Big to Fail” economic doctrine because their capital to debt ratio was too small and their overall business practices to sound.”
“It’s a race to the bottom”
It goes on to say:
“Rogers [CEO of a multinational bank] advises other CEO not to let on that they are in the market for bad loans, or worse yet, financially sound. As now days, it is considered a sign of weakness.
“Tell me how a financially sound institution is supposed to compete with unsound business practices that get rewarded with bailouts from the federal government,” rhetorically asked Rogers. “It’s a race to the bottom and it’s on.”
Work until You’re 90
While I don’t believe Lehman was singularly responsible for starting the financial crisis, should they have been bailed out? Should any of the other financial services bailouts have happened? Did these bailouts actually save any jobs? Or did they just guarantee that we’ll be working into our 90’s in order to pay back the national debt?
Would a bailout have let your company recover or should management have been forced to make tough business decisions to adapt to the economic conditions?
Laurie Phillips never really applied her degree in economics until this past year and now she wishes she had majored in art history. She writes for Sundance Research when she’s not pondering the economy’s effect on people.
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