A book that I am reading at the moment that depicts a detailed description of how the fifth largest investment bank on Wall Street went under. Truly gripping stuff, feels like having a front-seat experience of how the entire financial system could have collapsed. The author did really portrayed the emotions and thoughts of the insiders. A good read especially for outsiders who want to know how Wall Street operates. From the rumours on the net, to the credit default spreads, to the calls by the OCC, how people with inside information were shorting the stock using options and customers pulling out to materialize into what was a full scale bank run. It highlights the dangers of overnight repo, it can happen very suddenly. It detailed how even the best efforts by the Fed and treasury could not keep a franchise that was more than a century old from collapsing. It detailed how the downgrades by Moody's and S&P could deliver such a devastating blow. The alpha-male culture that is prevalent in Wall Street, never admitting to any weakness or whatsoever.
The baiting and stringing by JPMorgan's Jamie Dimon who successfully acquired the company on the cheap and risk free. Then the ultimate humiliation of Bear Stearns of having to sell itself for $2 a share. I'm still midway of reliving the experience and remembering it in my mind so as to make sure that I recognize these signs when the next one occurs. It happened to Drexel Burnham Lambert and Kidder Peabody in the past, now it happened to Bear Stearns, Lehman Brothers and Merrill Lynch. I am sure it will happen again, another time in the future when the pain has been long forgotten. History never truly repeats itself in the same identical manner, but there are some things about human behavior that can never change.
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