Just cannot stay away from the financial mess, it's so pervasive today. But, today's events relate to several issues, such as leverage, that have been discussed in this blog and in truth engineering.
For one, Reuters reports that Lehman has assets of $600B that are leveraged off of $30B of equity. The fact is that a 5% decline in asset value eats up the equity. So, then what have we? Froth!
The trouble is, folks, that everyone is wrapped up in this idiocy that seems to get credence that the players are from the top-notch schools and are supposedly of the highest caliber. Well, it's really an addiction that we've allowed to persist. And, a stable economy cannot rest upon this type of madness.
Too, Reuters reports a special trading session today to allow those whose derivatives involvement is shaky due to the pending Lehman failure to get themselves unburdened. Or, eat some known loss rather than face even more of a hole. Emergency, it says, indeed!!
All of this was preventable; a more sane set of practices is definitely possible.
01/18/2009 - We even need to look at why we need finance.
3 hours ago