Lehman Brothers doesn't fall

  • Thread starter Deleted member 1487
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Deleted member 1487

I've been watching too big to fail and it seems that Lehman Bros had multiple chances to be saved, but flubbed these because Dick Fold was not willing to lose money on the deals, despite the fact that his stock prices were falling by the second. What if Dick took one of the deals (either the Koreans or Warren Buffet) and saved Lehman Brothers? What would that mean of the economy today?
http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers
 
I've been watching too big to fail and it seems that Lehman Bros had multiple chances to be saved, but flubbed these because Dick Fold was not willing to lose money on the deals, despite the fact that his stock prices were falling by the second. What if Dick took one of the deals (either the Koreans or Warren Buffet) and saved Lehman Brothers? What would that mean of the economy today?
http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers

that change in and of itself keeps 600 billion of lehman credit defaults from going through... probably saves 1000 points on the dow; also it significantly reduces the pressure on AIG and the other banks; it also checks the spiral... perhaps merril lynch can survive independantly... washington mutual is still screwed; wachovia might be able to survive independently also
 

Deleted member 1487

No other ideas? How about what it would mean for 2011's economy? Would we be better off?
 
It basically means that the Great Recession isn't as great. You'll probably still have a crash in the future though, as there might not be the impetus to pass financial market reform.
 

Deleted member 1487

It basically means that the Great Recession isn't as great. You'll probably still have a crash in the future though, as there might not be the impetus to pass financial market reform.

One might argue that it was those reforms, such as increasing capital requirements for banks, that locked up credit, even to this day, preventing the economy from truly recovering...
 
I wouldn't say that. We're in a liquidity trap, and since there is no confidence in the economy, banks won't lend. If anything, Dodd-Frank should increase consumer confidence in the banks not throwing their money away.
 

Commissar

Banned
I've been watching too big to fail and it seems that Lehman Bros had multiple chances to be saved, but flubbed these because Dick Fold was not willing to lose money on the deals, despite the fact that his stock prices were falling by the second. What if Dick took one of the deals (either the Koreans or Warren Buffet) and saved Lehman Brothers? What would that mean of the economy today?
http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers

It lasts as long as people don't realize all those Credit Default Swaps broke Chains of Titles and most people who got Loans from the aforementioned Banks don't owe shit to the banks and own their homes free and clear and want the money they forked over since the chain of title was broken back.
 
No other ideas? How about what it would mean for 2011's economy? Would we be better off?

the pain in the housing market and credit default markets would have happened anyway... you are basically substituting one bailout (lehman) for another (aig)

you are talking about the difference between ripping a band aid off in one motion versus slowly pulling it off

IMO

the dow is maybe 500 points higher than it is today BUT we merge with otl's credit default market AND housing market by late 2009 anyway
 
If this delays the start of the recession, McCain might win, or at the very least, the 2008 Presidential Election in the United States will be less decisive.
 
If this delays the start of the recession, McCain might win, or at the very least, the 2008 Presidential Election in the United States will be less decisive.

If the recession was postponed until after the election, or the bottom simply never fell out (Paulson took more decisive action) then you're going to have a third straight nail-bitter. If the election happened on September 14th, here's what the results would look like according to the polls:
genusmap.php

Obama/Biden (D): 49%, 273 Evs
McCain/Palin (R): 49%, 265 Evs
Other: 1.5%

Keep in mind that McCain was trending up in the polls following the Republican National Convention. It would have been very conceivable for McCain to win the popular vote and lose the electoral vote, or visa versa. If the map above was accurate, the results would be the closest in Colorado and Michigan for Obama, and in Virginia and Nevada for McCain. Wisconsin should be at 50% for Obama, my bad.

So you wouldn't have the election decided until a day or two later, though I figure both candidates would have been willing to concede rather than push for a recount. The pundits probably would have said that Obama won the election due to young people and Latinos in the Southwest (holding McCain under 50% in Arizona), but nearly lost it due to the white working class breaking hard for McCain (case in point Michigan, Ohio, and Pennsylvania).

Going forward, Obama probably keeps Paulson on as Treasury Secretary due to keeping the economy out of a serious recession. In the Senate elections, the Democrats pick up five seats (AK, CO, NH, NM, VA), while losing close races in MN, OR, and NC. The Democrats also make modest gains in the House. This might actually benefit Obama, as the economy is less of a concern and he can focus his efforts on domestic and foreign policy. He probably gets less accomplished, but there is probably no Tea Party or massive 2010 wave election.
 
hcallega,

The consequences of that could be interesting indeed, especially if McCain comes out on top with the popular vote, but loses in electoral votes to Obama.
 
hcallega,

The consequences of that could be interesting indeed, especially if McCain comes out on top with the popular vote, but loses in electoral votes to Obama.
You would see a much stronger, more mainstream Tea Party movement with a possible push towards electoral reform. Then, if the economy crash is postponed until 2009, you would likely see an even larger Republican Revolution ending with Obama as a one-term president. I would like to think this would somehow butterfly into Republicans taking up the mantle of more sensible monetary policy (rather than cut and spend) but this might just be another prolonged recession scenario.
 
If the recession was postponed until after the election, or the bottom simply never fell out (Paulson took more decisive action) then you're going to have a third straight nail-bitter. If the election happened on September 14th, here's what the results would look like according to the polls:
genusmap.php

Obama/Biden (D): 49%, 273 Evs
McCain/Palin (R): 49%, 265 Evs
Other: 1.5%

Keep in mind that McCain was trending up in the polls following the Republican National Convention. It would have been very conceivable for McCain to win the popular vote and lose the electoral vote, or visa versa. If the map above was accurate, the results would be the closest in Colorado and Michigan for Obama, and in Virginia and Nevada for McCain. Wisconsin should be at 50% for Obama, my bad.

So you wouldn't have the election decided until a day or two later, though I figure both candidates would have been willing to concede rather than push for a recount. The pundits probably would have said that Obama won the election due to young people and Latinos in the Southwest (holding McCain under 50% in Arizona), but nearly lost it due to the white working class breaking hard for McCain (case in point Michigan, Ohio, and Pennsylvania).

Going forward, Obama probably keeps Paulson on as Treasury Secretary due to keeping the economy out of a serious recession. In the Senate elections, the Democrats pick up five seats (AK, CO, NH, NM, VA), while losing close races in MN, OR, and NC. The Democrats also make modest gains in the House. This might actually benefit Obama, as the economy is less of a concern and he can focus his efforts on domestic and foreign policy. He probably gets less accomplished, but there is probably no Tea Party or massive 2010 wave election.
The map looks about right to me. McCain did get a bounce out of the conevntion, and most polls have the race in a deadheat by mid-september. He was hitting Obama well (eg a celerbity candidate with no substance), and Palin and yet to make any major mistakes, then came the Leaman brothers fall, and the gaffe about the fundmentals of the economy, from that point Obama's lead opened up, and McCain never recovered.
I thought that the race would be close like the previous two elections, in 2004, and 2000 until the fall of Leaman Brothers and the McCain gaffe.
 
I'ld love for Commissar to offer any evidence to support his claim that most of the loans from those banks are null and void.
 
I'ld love for Commissar to offer any evidence to support his claim that most of the loans from those banks are null and void.

I'm no expert, but I read a lot of blogs, and here's my take on it. My understanding of the situation is that the loans aren't null and void, but that they're not actually owed to the groups claiming to own them because the title wasn't properly transferred. The whole situation is made even murkier by the fact that the originator was paid for the mortgage, and, in many cases, the originator is in bankruptcy, making it impossible to rectify this without going through lengthy court proceedings. I get the impression that nobody really knows how the courts will fall on this, if this will turn out to be a major problem or just a hiccup; legal theory appears to be stronger for the homeowners, while the impetus of practical politics is stronger for the banks.

In any event, while there have been a few isolated victories based on this thesis, it has yet to see the sort of precedent-setting case that could be generally applied. There have been a few instances of people getting their homes effectively free and clear, but this was only after particularly egregious bank abuses - as in blatant forgery, not just robosigning, but wholesale forging of documents, apparently to replace paperwork the banks had mislaid or never generated.

For example:

Naked Capitalism
 
I've been watching too big to fail and it seems that Lehman Bros had multiple chances to be saved, but flubbed these because Dick Fold was not willing to lose money on the deals, despite the fact that his stock prices were falling by the second. What if Dick took one of the deals (either the Koreans or Warren Buffet) and saved Lehman Brothers? What would that mean of the economy today?
http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers

Just watched the movie myself -- was stunned by Fold's decisions. Another PoD that may have potential is even the deal with Barclays had been allowed to go through by the London regulators.

FWIG, if Lehman doesn't go under, AIG could very well be rescuable -- and if that happens, it may actually be enough to avert any potential collapse of the financial system. AAR, I can see McCain winning the Presidency TTL...
 
Hmmm I doubt this would prevent the recession, just delay it, there's still all the sub prime debt, and then the sovereign debt crisis to kick in...
 
The problem is that Dick Fuld would have needed a Damascene conversion to get signed up to the fact that he needed to do something drastic and lose some control at the same time. I've read up quite a bit about Fuld, and it strikes me that he was a total asshole.
 

MAlexMatt

Banned
I wouldn't say that. We're in a liquidity trap, and since there is no confidence in the economy, banks won't lend. If anything, Dodd-Frank should increase consumer confidence in the banks not throwing their money away.

both both both both both both both both both

politics is the antithesis of science.
 
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