| By Patrick Wood, Editor The immediate aftermath of the Lehman Brothers bankruptcy will be a massive and manic flight to liquidity and withdrawal of funds and credit from banks, S&L's, insurance companies and brokerages, leading to more failures. Nothing can stop it at this point. The stunning magnitude of debt owed by Lehman Brothers - $613 billion -- comes to light because of their public bankruptcy filing. No wonder that Barclays, has, over the decades, experienced a dizzying array of mergers and acquisitions The Lehman Brothers bankruptcy is the largest in the history of the world. Banks around the world who lent money to Lehman must absorb immediate and huge losses of capital and liquidity. Even if they eventually recover some of their money, they won't have access to it until the bankruptcy is completed. Insurance companies (like AIG) who issue insurance contracts against financial failure and non-performance are next on the chopping block. Policyholder claims could quickly overrun their ability to make good. Investors have figured this out already. They paid almost $70 per share for American International Group (AIG) last October. Today, some of those could have sold their shares for under $6.00 per share, a drop of over 90% in one year. And who will rescue Washington Mutual (WaMu)? WaMu is the largest savings-and-loan in the United States, and is currently unable to raise additional capital. Lenders and insurance companies are backing away. Investors loved WaMu last October when they paid over $37 per share. They could have sold the same shares recently for $2.01 per share, for a loss of 94%. There are a host of other financial institutions that are on the ropes as well. American investors and politicians laughed at Fortis Bank when it released this report on June 28, 2008:
American sentiment is rapidly changing: Six thousand banks is a long way to go! When chickens discover a blemish on an otherwise healthy chicken, they will immediately attack it and peck it to death. The global financial market players are just as merciless. | Contact Information
| ||
Bank of AmericaDear Friend,
The financial meltdown has officially launched, with the largest bankruptcy in history - Lehman Brothers.
The August Review has sternly warned about an imminent financial meltdown, but now it is upon us.
Next up is the beginning of global institutional bank runs against their own kind.
Here are some thoughts for today...
Please forward this and the link to any and all of your contacts. If they didn't listen to you earlier, they will be listening now!
Regards,
Patrick Wood, Editor
The August Review
Posts
