Thursday, September 16, 2010

The Financial World: Lehman & Others

Lehman Brothers Building New York now Barclays Capital ©2009 Am Ang Zhang

This is the second anniversary of the collapse of Lehman Brothers and I thought it might be interesting to reprint some of my posts about the subject.

To Intervene Or Not: A Colossal Failure Of Common Sense.

Saturday, August 15, 2009

“It would not surprise anyone to find that in our work we come across some rather peculiar cases which are indeed stranger than fiction. You often saw the life story of some child unfold in front of you and there appeared little you could do to effect any change in the course it was going to take.” Chapter 36 Entrepreneur, The Cockroach Catcher .

Stranger than fiction!

“At the age of ten, I resided in some kind of a marital no-man’s-land, a beautiful but loveless gabled house.”
“……father had accepted the end of his marriage and had left my stunning fashion-model mother to bring up their five children all on her own. I was the oldest……”
“……mom now in desperate financial straits, my three brothers and
one sister and I ended up in a housing project in the worst part of a distinctly suspect city……”
“……there were gangs of trainee criminals staging shoplifting raids and night time burglaries all over the city……”
“……in eighteen months I went to three different schools, each on a bigger disaster than the last…….”

No this was not from one of my cases; this was extracted from a book I have been reading:

Read the full Post here>>>>>

Lehman filed for bankruptcy protection on the 15th of September and
Barclays Capital wasted no time in acquiring the main Lehman US operation on the 17th of September. Common sense?

Since March 2009 Barclays share price has gone up seven times.
A Colossal Failure of Common Sense is published by Crown Business, Random House.

Goldman Sachs, SEC & The Greatest Trade Ever

Sunday, April 18, 2010

Wall Street Journal:
OCTOBER 31, 2009

It was the fall of 2007, financial markets were collapsing, and Wall Street firms were losing massive amounts of money, as if they were trying to give back a decade's worth of profits in a few brutal months. An investor named John Paulson somehow was scoring huge profits.

His winnings were so enormous they seemed unreal, even cartoonish. His firm, Paulson & Co., would make $15 billion in 2007.

Mr. Paulson's personal cut would amount to nearly $4 billion, or more than $10 million a day. That was more than the 2007 earnings of J. K. Rowling, Oprah Winfrey and Tiger Woods put together. At one point in late 2007, a broker called to remind Mr. Paulson of a personal account worth $5 million, an account now so insignificant it had slipped his mind.

The Wall Street Journal’s Gregory Zuckerman in his book, “The Greatest Trade Ever” wrote:

Paulson & Co. had bet against about $5 billion of CDOs and made more than $4 billion from these trades—including $500 million from a single transaction—according to the firm’s investors and an employee of the firm. One of the biggest losers, however, wasn’t any investor on the other side. It was the very bank that worked with Paulson on many of the deals: Deutsche Bank. The big bank had failed to sell all of the CDO deals it constructed at Paulson’s behest and was stuck with chunks of toxic mortgages, suffering about $500 million of losses from these customized transactions, according to a senior executive of the German bank.

These were some of Paulson & Co.’s largest scores.

Mr. Paulson bought a $41 million home in early 2008 in Long Island and he lives with his wife and two daughters on the Upper East Side of Manhattan.                                            The New York Times.

Read all about it here>>>>>>>>>

History & Democracy : Liar’s Poker & The Big Short

Friday, August 6, 2010


I think there is something fundamentally scary about our democracy…. Because I think people have a sense that the system is rigged, and it’s hard to argue that it isn’t.

“By late September 2008, the nation’s highest financial official, US treasury secretary Henry Paulson, persuaded the US Congress that he needed $700bn to buy sub-prime mortgage assets from banks. Once handed the money, he instead essentially began giving away billions of dollars to Citigroup, Morgan Stanley, Goldman Sachs and a few others unnaturally selected for survival.”

“By then it was clear that $700bn was a sum insufficient to grapple with the troubled assets acquired over the previous few years by Wall Street bond traders. That’s when the US Federal Reserve took the shocking and unprecedented step of buying bad sub-prime mortgage bonds directly from the banks. By early 2009 the risks and losses associated with more than $1tn worth of bad investments were transferred from big Wall Street firms to the US taxpayer. The events on Wall Street in 2008 were soon reframed as a simple, old-fashioned financial panic, triggered by the failure of Lehman Brothers.”

Dr Am Ang Zhang is the author of The Cockroach Catcher.

No comments: