On September 15, 2008 Lehman Brothers filed for bankruptcy, something that nearly caused a meltdown of the world’s financial system. A few days later Bernanke made his famous statement that “we may not have an economy on Monday.” This report includes the situation Lehman Brothers before and after the bankruptcy and how exactly this event triggered the huge financial panic all across the globe termed as credit crunch. It was a nonlinear and sudden catastrophic event for the global economic system, unprecedented in scale in human history.
I analysed two major aspects, which pulled the worst possible recession of the century. First one is Hidden losses and the second one is that confidence plays key role in finance. Confidence can be conceptualized as a belief that action can be based on proxy signs, rather than on direct information about the economic situation itself.
I have also studied how exactly Lehman went bankrupt, and how this worry transformed into a total disbelief in existing proxy signs - a loss of confidence as well as a withdrawal of confidence in this report. This report includes the series of action happened or taken before and after Lehman Brother went bankrupt. Although the debate of those actions will continue on and only time will be able to answer what could have been right or wrong about it..!!
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Note: I would like to thank all of those people who are there in my references, without them I would not have been able to understand such a critical incident of century.
Interesting blog post. It made me think a bit. By the way -- I love the new blog background. It is lovely! Tomorrow I will show you how to send email notices of your posts. :)
ReplyDeletethanks..!! :)
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