WRONG:
Steve Kroft seems to think the collapse of Lehman Brothers was a trigger, and had it not fallen, we would not have had a financial crisis.
Thats simply wrong.
No, it was not the cause of the crisis — it was merely one of the first trailer homes in the park to get blown away by the tornado.
The rest about the non prosecution is worth watching:
Source: 60 Minutes
Category: Video
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
I completely agree re mistake of attributing cause to Lehman or any single event.
That’s like saying the ’cause’ of the French revolution was the fall of the monarchy…
It kind of misses the precursors.
Here, similarly, there are a number…
And failures of the political system, both political parties… and, frankly and sadly… the electorate… who’ve been played for a sucker…. somewhat willingly… all contributed to the situation… both here and in Europe.
Politics is the art of preventing people from taking part in affairs which properly concern them.
- Paul Valery
And sadly… they’re getting very good at it.
Re-Igniting the Enlightenment: On Building Landscapes for Decision
http://culturalengineer.blogspot.com/2010/12/re-igniting-enlightenment-on-building.html
I can live with Kroft’s mistake, 60 minutes has gone above and beyond to keep attention on this and other topics, like HFT, that many “journalists” seem to avoid.
Kroft is one of the reasons I cannot bear to watch 60 minutes.
I can’t believe he is as dumb as he comes across on the show, but what do I know? His parts seem quite literally to be at an elementary school level, ridiculously simplistic, verging on moronic.
Hard to believe this used to be regarded as a “hard hitting” news show. Not any more.
Mr. Ritzholz,
“No, it was not the cause of the crisis — it was merely one of the first trailer homes in the park to get blown away by the tornado. ”
You have to write more on this point. I am inclined to agree with you… However, the conventional wisdom is that letting Lehman fail was the decisive policy error that turned a financial crisis into a global economic catastrophe. The fascinating scene in “Too Big Too Fail” where Christine Lagarde condemns Henry Paulson for not bailout Lehman is the mainstream consensus (rightfully or wrongfully).
For better or worse, Anton Valukas appears to subscribe to the “letting Lehman fail destroyed the world” thesis.
~~~
BR: I’ve discussed this repeatedly over the years
Gaah. And with the recent suspended death sentence of Bo Xiali’s wife in China for offing that Brit, seems to me that if the feces does hit the rotating blades, we deserve whatever happens. Maybe it will indeed take a a new revolution.
We are truly fscke’ed. We’re no longer a nation governed by laws, but by fiat currency. Time to stock up on non-perishables, I’m afraid. And with both sides of the aisle on the take…..
It all depends upon what is meant by the phrase “financial crisis.”
If the “crisis” refers to a period from 9/7/2008 (announcement of conservatorship of GSEs) to 11/25/2008 (announcement of TALF), then, it seems to me that Croft’s implied argument is sound.
Had, immediately following Lockhart’s announcement, Paulsen and Bernanke defined TBTF financial institutions and announced that the government would “quickly, freely and readily” lend those institutions whatever was necessary to permit them to meet their financial obligations — and had subsequently done so — there would not have been a “financial crisis.”
Evidence (post jump) does suggest that the sharp fall in orders which came immediately after the Lehman bankruptcy was indeed caused by it. While we certainly cannot blame that single event for causing the broader crisis, we can say with some confidence that it exacerbated it and did lead to a much sharper fall in activity.
For those who did not notice the search window on your web page, I used it.
How Barry would have written the article…had he been asked:
“Over-Leverage, Under-Capitalization Brings Down Lehman (Update)
“The biggest bankruptcy in history might have been avoided if Wall Street had been sufficiently capitalized, used only moderate leverage, and avoided making false assumptions in their econometric models.
As Lehman Brothers Holdings struggled to survive last year, it was using as much as 40 to 1 leverage to purchase AAA securities that turned out to be no where near as safe as the triple A ratings assigned to it by Moody’s and S&P made them appear. Lehman, the second largest securitizer and trader of mortgage backed securities behind the also defunct Bear Stearns.
Wall Street continued practicing one of its darkest arts — the over rating of securities, bonds and derivatives — by self-interested parties in exchange for fees. In the 1999-2000 tech boom, the analyst community vastly over rated stocks with “Buy” and “Strong Buy” ratings. Sell wa hardly in their vocabulary. These were mostly profitless “dot com” companies built on the merest of concepts. The underwriting fees were substantial, however, and the analysts firms were well paid via large syndicate and IPO banking fees. …”
http://www.ritholtz.com/blog/2009/03/did-naked-shorting-do-lehman-in/
An interesting video
http://www.ritholtz.com/blog/2011/09/lessons-of-lehman%E2%80%99s-collapse/
barry … reach out to their producers. point out the error. offer to provide them the background they need to do it right. love to see you in a weekly / monthly segment with them ‘splaining whats going on in the country.
‘as a “hard hitting” news’
the truth – we don’t wanna see the truth as a whole
50% of us are not going to like it
~~
onT – this TBTF meme and stopping it now and how – my lame brain is starting to see it as: some failures are just to big to fix while running – best wishes
~~
onT and fixing TBTF – first switch off 50% of machine – Stock Selling Off – Shareholders forced to turn in shares at current market Value
ie: AAPL borrows $630B at .25 of1 %interest and sends money to shareholders .. richer world buys iThings and AAPL pays back debt *
submit ps – me thinks 50% world NotHappy
*pps – AAPL Board manages under new yuck parameters (money for nothing chicks for free) Gone
@michael-D: Amen, you should send them a note, BR.
@MikeNYC: You’re right that Mike Wallace in particular was considered “hard-hitting” and the show has gone downhill a bit with lightweights like Lara Logan, but actually 60 Minutes is seen as the beginning of the decline of serious news. It was the first to mix “hard” news, the sort that is costly/loss-leading (and by the way used to be a mandate for stations to obtain a license to use the airwaves), with entertainment. If you follow the history of broadcasting, the success of 60 Minutes led to the existence of tripe like CNN and Headline News. But I still think 60 Minutes is one of the best programs on TV and recommend Don Hewitt’s “Tell Me a Story” for more on the program.