Iceland is virtually bankrupt, who's next?
I think that's the $700 billion question. (pun intended)

what about credit default swaps CDS which r around 60 trillion dollars many a size of economies of europe+japan+usa etc put together
what will happen now people r saying whole countries will go bankrupt like ireland .....


this seems a bigger depression than 1929.

GOD SAVE US

Just one question
Out of all the well written posts on this thread, how and why did IHT select something out of my piece of SPAM?

Cheers
Sukrit

International Herald Tribune


"Is it a time for us b-school aspirants to reassess our career goals?" wrote a blogger identified as Sukrit Munjal, 22, from Bangalore. Another blogger who called himself Unhappy Demon, said simply: "Don't post these kind of sick scary news man."


, congratulations folks

Main Famous ho gaya :clap::clap::smilecol::drinking::1eye:

Thanks to PG

Cheeeeeeeeeeeeeers
Sukrit Munjal

International Herald Tribune

"
India's best and brightest, who once sought jobs in medicine and engineering, have turned to business schools in increasing numbers. News of Lehman's bankruptcy filled PaGalGuY.com, a message board for India's aspiring financiers, with mournful comments.


"Is it a time for us b-school aspirants to reassess our career goals?" wrote a blogger identified as Sukrit Munjal, 22, from Bangalore. Another blogger who called himself Unhappy Demon, said simply: "Don't post these kind of sick scary news man."


, congratulations folks

any news on deutsche bank?
its said its leverage at 1:50 times as vs lehmans 1:30?

which banks r relatively safe for next 1 year??

also what has been effect on kpo sector in india?
are companies like evalueserve,copal, irevana etc firing people these days :|

Certainly, Deutsche Bank is going nowhere, the bank has done good buisness in South Asia, and if Friday's article to be believed the bank is ranked best I bank in India
Deutsche Bank is top I-bank in India

However, the situation is still grim in the US, and which has shown significant turmoil in Indian markets as well. We are in very difficult situation, lets hope for the best, everyone has its fingers crossed.

any news on deutsche bank?
its said its leverage at 1:50 times as vs lehmans 1:30?

which banks r relatively safe for next 1 year??

also what has been effect on kpo sector in india?
are companies like evalueserve,copal, irevana etc firing people these days

Double post...

Regulator sells Washington Mutual

WaMu was set up on 25 September 1889

Washington Mutual (WaMu) has become the biggest US bank to fail, as regulators were forced to take control and sell off the mortgage lender.
The Office of Thrift Supervision (OTS) sold its assets to JPMorgan Chase for $1.9bn (1bn) after $16.7bn of deposits had been withdrawn in 10 days.
Regulators were quick to reassure customers that WaMu would be trading as usual despite the change of ownership.
WaMu was hit by mortgage defaults the collapse of the US housing market.
"For bank customers, it will be a seamless transition," said Stella Blair, chairman of the Federal Deposit Insurance Corporation (FDIC).
"Bank customers should expect business as usual come Friday morning."

WASHINGTON MUTUAL

2,239 branches in 15 states
43,198 employees on 30 June
Set up in 1889
"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.
The bank had about $307bn of assets but only about $188bn of deposits, which meant it had to raise funding on money markets, which has become increasingly expensive.
Additional funding
It raised an extra $7bn of capital from a consortium led by the private equity group TPG in April.
If WaMu had just failed then depositors would have been compensated by the FDIC, so the sale to JPMorgan may be a positive step.
"There was some concern that if a bank the size of WaMu failed the FDIC fund would not be adequate to meet the task and would require additional funding from the government," said David Resler, chief economist at Nomura Securities.
Instead, the responsibility for the deposits has been transferred to JPMorgan Chase.
"That means the FDIC fund is intact and can be used for other closures if necessary," Mr Resler added.
Sub-prime lending
It is less than three weeks since WaMu dismissed its chief executive Kerry Killinger, who it blamed for the bank's expansion into sub-prime and other comparatively risky lending.
Sub-prime mortgages are offered to borrowers with inferior credit records or unpredictable incomes.
WaMu is JPMorgan's second big fire-sale acquisition since the start of the credit crunch. It bought Bear Stearns in March.

WaMu launched an upbeat advertising campaign in February
The WaMu deal means it is now the second-biggest US bank, with 5,410 branches in 23 states.
"This deal makes excellent strategic sense for our company and our shareholders," said Jamie Dimon, chairman of JPMorgan Chase.
Before WaMu's closure was announced, it had a stock market value of $2.9bn.
In February this year, WaMu unveiled a new Whoo Hoo! advertising campaign, aiming to "capture the essence of what it feels like to bank at WaMu".

wAshington mutual sell s out

amazing every week 1 big gun is under siege

Article in Today's Hindu Editorial: Shows how people have started fearing investing huge amounts in Banks and that the notion of 'Safe Banking' is in danger...

Whatever happened to good old, simple banking?

Wall Street's pain ... Asia's gain?
September 25, 2008
Posted: 207 GMT
When my crew and I arrived on the scene at the Singapore office of AIG, we were not only struck by the number of people lining up to cancel their policies and withdraw their money but also by the remarks of the cab driver who pulled us up to the side of the building.
"Haven't you heard?" he asked us incredulously when we tried to confirm exactly what the people were waiting for. "AIG is going bankrupt!"
Now, that might not sound surprising to someone living in the United States. But we were thousands of miles away from the home turf of the American insurance giant.

Granted Singaporeans have a strong interest in the financial world, but the driver got me wondering
How many Asian financial institutions can you name?
In the past few days, Japanese companies such as Mitsubishi UFJ and Nomura have been throwing their money into Wall Street firms - either to buy a strategic stake (Mitsubishi UFJ into Morgan Stanley) or to pick up assets (Nomura into Lehman). The belief here is that these Japanese players are building their brands and positioning themselves for greater influence in the global financial markets.
And the Japanese aren't the only ones.
Before Lehman went bust, shares of the investment bank were supported by news Korea Development Bank was gearing up to buy a massive chunk of the venerable U.S. firm.
Cash-rich governments are getting in on the action, too.

State investment arms, known as sovereign wealth funds, are buying up shares of Wall Street titans such as Merrill. Many of the governments out here have coffers filled with cash from goods sold to American consumers.
So are Asian financial firms poised to become household names?
Wall Street's pain Asia's gain?
:iamcool:
Nishant

@@Pramod@@ Says

I think every investment banking will disolve into proper banking. There wont be any concept of investment banking.

Would you please explain this?

I think every investment banking will disolve into proper banking. There wont be any concept of investment banking.

what will be effect of this goldman sachs thing turning into commercial banks?

what about future of indian employees?
will they stop getting 100-200% bonuses?


can goldman sachs still collapse since even commercial bnks like citibanks r in dire straits?

Every financial institution which had exposure to mortgage backed securities or those who had insured the SPVs which issued these securities are facing the music. Goldman was relatively conservative while investing in these securities, however, in capital terms {absolute terms} it is significant.

Goldman got green signal from Fed for Commercial bank, I guess the margins will be reduced for the Company, average salary will come down, and going forward Goldman will have the obligation of Cash reserve with Fed. However, some good news came up today when Warren Buffett announced injecting 10 Billion {close to 2% of the Company's total Assets} in Goldman.

Buffett injects $10bn into Goldman Sachs - Business News, Business - The Independent

This will certainly help Goldman and probably WB is expecting good returns of the capital he is injecting

today read in ET.....RBS is going to recruit the skilled employees of Lehman.but they are offering salaries lower than wat the employees currently earn.

To All MBA Aspirants thinking of a career in FINANCIAL SERVICES,

A BIG QUESTION TO YOU ALL

With the Wall Street I-Banks becoming history now, what we guys having a mamagement degree in Finance will expect our career in Future ?

Please pour in your thoughts about what you all think a career as a Finance Professional ?:confused:

My views are: I-Banking is under risk. A silver-lining in Asset Mgmt, Wealth Mgmt as they still have career prospects & demand on the Market.


:shock:

what will be effect of this goldman sachs thing turning into commercial banks?

what about future of indian employees?
will they stop getting 100-200% bonuses?


can goldman sachs still collapse since even commercial bnks like citibanks r in dire straits?

I got this wonderful analysis from XIBM for Lehman which summarises everything, answers why, what, when for the Company, a good read -

Why did Lehman Brothers go bankrupt?

- Lehman Brothers was hit by a massive credit crisis and fast plummeting real estate prices. They lost $60 billion loss in bad real estate loans forced the bank to file for bankruptcy.
- The false pride, greed and the arrogance of the company especially that of its CEO Richard Fuld which is enumerated below in the numerous decisions he took led to the company paying a high price for the same.
- The chairmen of both Bear Stearns and Lehman fired their immediate number twos, placing the blame on their subordinates who, incidentally, happened to be their closest friends.
- A little over a year back, when HSBC had disclosed its worries about the property sector, Lehman increased its bets through a $20-billion-plus acquisition of a property company.
- Lehman spurned offers from the Korea Development Bank and China's CITIC to invest capital on grounds that the price offered was too low.
- Housing loans made by the bank to people with little support made these loans very risky, and when interest rates rose, these borrowers could no more repay Lehman. This led to huge losses, the extent of which is not yet clear.
- Refusal of other banks to do business with Lehman because of its complex and, at times, opaque ways of trading. This led to it losing almost all business and triggered its fall.
- The final straw for Lehman was the fact that both Barclays Plc of the United Kingdom and Bank of America Corp pulled out of takeover talks.
- Barclays wanted to buy Lehman out at a discount, so to speak. But when Lehman CEO Fuld decided that his bank was worth much more than what Barclays had apparently offered, Barclays stepped back.
- The US government could have helped, but US Treasury Secretary Henry Paulson said that it would not use up any more taxpayer dollars to bail out Lehman Brothers as it would lead to investment banks getting away with their gambling ways.
- The word one saw repeated a dozen times in the last few days in relation to Lehman's bankruptcy is 'hubris' (exaggerated pride). In retrospect, Lehman's chairman was prophetic in an interview published in Euromoney in July 2005. He said, "I worry that we could get arrogant. If you get arrogant, you lose your way, and start making mistakes". Those words will haunt him for a long time.

What will be the impact of Lehman Brothers going bankrupt?

- Over 5,000 employees in the UK have already lost their jobs, while about 20,000 in the US might as well forget going back to their work stations. About 2,500 Lehman employees in India too face the axe.
- Lehman Brothers has outsourced deals amounting to anywhere between Rs 550 crore and Rs 700 crore (annually) to numerous IT firms, including majors like Tata Consultancy Services, Satyam Computer Services and Wipro. These projects are under the cloud now.
- Lehman Brothers' exposure to the Indian stock market through special purpose vehicles and real estate stocks is said to be of about $1.5 billion, enough to shake up the markets.

Effect on Indian Banks:

1. The worst affected is the private sector bank, ICICI Bank, its exposure is to the tune of $80 million, which it invested in Lehman's senior bonds.
2. Among PSU banks, SBI has an exposure of around $55 million (Rs256 crore) and PNB $5 million to Lehman. Bank of Baroda's exposure is less than $10 million. Bank of India is stated to have a direct exposure of $11.33 million.
3. These investments seem to be at high risk now and the fate of the banks investments depends on the execution of the bankruptcy procedures which will determine how much of their capital they get back from the sell off of Lehman's assets.

Effect on Realty/Infra Projects:

1. Unitech has also gone on record stating that it has received Rs.740 crore and has closed the deal with Lehman Brothers.
2. DLF Assets raised US$200 million in 2007 as equity from Lehman Brothers, the company says that the money has been received but equity is yet to be transferred.
3. Lehman had also invested $80 million in Bangalore-based SEZ Gandhi City and was likely to hike its share to $300 million.
4. Ashok Piramal's Peninsula Land has inked a JV with Lehman, which will have a stake of 75% is to bring in Rs.5 billion, to invest in various realty projects of Peninsula.
5. Lehman has a 28.41% stake in KSK Energy. The above shares are locked in for a period of one year from July 05, 2008 (the date of IPO allotment) and cannot be sold in the stock market till the expiry of the said period.
6. These deals not yet executed are in turmoil and seem highly unlikely to be executed now and the ones which are partially executed may even have to be liquidated in case of a sell off arising from bankruptcy procedures.

Effect on Pre-IPO Placements:

1. Adani Power is currently looking at placing 4.4-5% stake of its equity with private equity investors. Jet Airways had planned to raise $400 million from private placement with institutions. ICICI Securities planned to offload 15% of its stake to raise $1 billion.
2. Tata's Ginger Hotel chain planned to offload 20% of its stake to raise $75-100 million for expansion of its no-frills hotel chain Ginger. Retail chain group - Subhiksha which also nurtures plans of going public is seeking FII investment for its 9% stake and was hoping to raise $80-100 million (Rs.400 crore).
3. All these private equity deals are highly unlikely to bear fruit now given the current financial turmoil caused in large part by the downfall of Lehman.

Probably this could be a good group discussion topic going forward !

i'd be damned.. they sell credit card debt too...??

Washington Times - Student, car debt quietly added to bailout plan

@ Pioneer : Hey, I lookup to Warren Buffet too. But my portfolio return is abysmal :sarcasm:

Greed did lead to LB fall - Abuse (Excessive use) of derivative instruments and using them as a tool for money making. But in my humble view, one can't put it all on that factor alone. Given the expectations and compensation plans on and for management, there's tremendous pressure to perform. When you're as huge as LB, you need to place some big bets on which line will yield the best returns over the next year or next decade. In their case, they may have picked the morgage based securities line of business. Whereas citi and others may not have invested substancial resources in this line.


One point faulted with LB is their unwillingness to accept that losses are becoming heavy on a sizeable chunk in their asset base and cut their exposure. By not taking a partner in return for cash in 2007 and early 2008, enabling them to clean their portfolio, they were being headstrong. Also remember that a lot of quant goes into their management and investment. Their models could have led them down.

Lehman brothers where trying to be HE-MAN brothers..
Debt greater than $600 billion with some crappy assets ....
Belgium would be shy with a GDP of $415 billion (Trivia from Bloomberg)

Some of the best brains of the world are jobless. It reminds me of one of the quote by WB. "A lot of smart people forget that an impressive number multiplied by zero is a zero"

Finance has become another F-Word on wall street.

With turn around of GS and Morgan Stanley under Uncle Sam's supervision as a dummy deposit banks there is death of IB.

Anybody seeking to be a I-Banker will sound like being a dot com professional. You can be an if you can struggle and beat the smartness of 200,000 jobless I-bankers in US....May become an I-banker but no premium dollars..

This has repercussions across all over India:
1. Those thousands of students, techies who are working hard late nights for CFA
2. Those who registered for other unpronouncable exams (FRM,CFP,PRM)
3. Thousands of guys who were lured by lucrative finance careers aspiring to be I-bankers, "Quants", traders.
4. Call centre and IT guys who are at the bottom 10.

The madness of the people never changes. During late 90's I saw the biggest craze of IT , H1B visa and USA.

Early 2000's saw the IT boom, where everybody wanted to be a techie.

2003 onwards saw the finance and the real estate boom ...

2008 saw the bust of the finance and real estate in US. Yet to come in india....Anybody saying that it is decoupled...I have enough evidence to show them struggling.

Career decision has to be chosen based on your real interest and talent, skills u have. Not on neighbours degrees :)

I'm waiting for the next big crazy madness boom :)

Last but not the least Quote from my guru.

Wall Street people learn nothing and forget everything-Ben Graham

some good news

Morgan Stanley, Goldman Sachs to change status to bank-holding companies-Intl Business-Business-The Times of India

defntly, it is a sane decision...though it is a socialist approach...but to save crores of ppl frm dis financial turmoil, it is a definitive step...bsides US govt. won't interfere fr any arbitrary firm...since AIG's market cap is more dan most of the countries' GDP (India included)...leavin it on its terms will surely kill most of the investrs!

What made you say that Market Cap of AIG is more than India's GDP, for the year ended 2007 India's GDP was close to 1,000 Billion USD, however the market cap of AIG is close to 15 Billion USD, which could be even less given the significant turmoil in the US.

Governments' step to bailout AIG is something which will definitely help the insurance giant for the liquidity concern, but the capital raised for the Company is costy - 11.5% / annum {LIBOR+800 bps}. AIG has to repay back the loan in next 4 years, they have pledged 80% of their assets which makes collateral very close to 600 billion USD. It is anyway safe deal of the government, if AIG goes bankrupt {liquidation of its assets will provide good capital to Government} or if it manages with the liquid money they have got, it will be a bonus for the taxpayers in the US.

How do they explain leveraging $600 Billion with a $20 Billion equity

To make the quick buck. Hope everyone takes the moral of the lesson from Lehman.

It is difficult to correlate a Company's debt with Equity, there is no logical correlation. If your logic stands then private companies do not stand to take up any debt on their balance sheets.

Loans, capital is always issued on Company's capability of paying it back, the measure of that is its Assets, if you check for Lehman they have around 700 Billion of assets, however, out of that, they have 500+ billions of securities {debt / equity}, which includes a big chunk of mortgage backed securities. Thats besides the point, that the present valuation of those issued securities is far less than they had expected it to be.

As far as quick buck is concerned, there are several companies still at Wall Street, who have outstanding CDO, ARM portfolio. Vikram Pandit has priced its CDO portfolio at ~56 cents, however, Merrill has the same portfolio which was priced at ~23 cents. It will be interesting to see how Citi announces its results for the 3rd quarter.

Cheers,

Went through the whole thread. But couldnt find anybody posting the real reason behind the end of Lehman.

GREED. PURE NAKED IB GREED :2gunfire:

Nothing else. MBS, ABS or whatever...Why did they indulge in such a thing.
How do they explain leveraging $600 Billion with a $20 Billion equity

To make the quick buck. Hope everyone takes the moral of the lesson from Lehman.

How is all this going to affect India now?

defntly, it is a sane decision...though it is a socialist approach...but to save crores of ppl frm dis financial turmoil, it is a definitive step...bsides US govt. won't interfere fr any arbitrary firm...since AIG's market cap is more dan most of the countries' GDP (India included)...leavin it on its terms will surely kill most of the investrs!

moreover, US govt. buys only to sell off in near furture not as a singl entity but as numerous small chunks

regardin US being not in a pos to take such a step...i shall say...wait fr a while n see hw GOVT profits sellin it in the future wen the pall subsides.

if my info is right the US govt is already in deficit.Now they have decided to bail out AIG with around $85 billion....how are they gonna manage?
is it a sane decision ?
just to clear some doubts !

This article gives you the full details of what has been happening on the I-Banking front for the last month or so.
Is there a future for investment banking? Is there a future? The Economist
useful one!
morgan stanley is in talks of a merger with wachovia
lehman has more than $600 bn debts :wow::wow:
http://fin-forex.com/the-total-amount-of-debts-lehman-brothers-for-may-31st-was-evaluated-in-613-mlrd-dollars/

Morgan is already in talks for merger
Now even Goldman sachs looks like is in trouble and may have to sell out:boat:

From where did you hear this news about Morgan Stanley ?

Morgan is already in talks for merger
Now even Goldman sachs looks like is in trouble and may have to sell out:boat:

thanks for the information:happy:

CDOs - Collateral Debt Obligation instrument caused the Sub-Prime crash and the 'Financial Earthquake' on Wall Steet.
So, what Next - how about a 'Financial Tsunami' - CDS? Whats that you may wonder?
Collateral Debt Swaps - The instruments total US$ 16 Trillion - Please note - it is 'T',
not B.
As we are entering era of 'Financial turbulence', not sure when CDS will implode. Better fasten your seat belts and sit tight!!

Worst is yet to come we havnt even started yet

Hey buddy, u're absolutely right
It'll be interesting to see what happens with the CDS situation... BTW how is the situation right noww... has the meltdown started affecting CDS market as well?? Couldn't come across any interesting article lately.. Do post in the source if u come across any..

P.S. CDS - Credit default swap and not Collateral debt swaps

Regards
Dushyant

CDOs - Collateral Debt Obligation instrument caused the Sub-Prime crash and the 'Financial Earthquake' on Wall Steet.
So, what Next - how about a 'Financial Tsunami' - CDS? Whats that you may wonder?
Collateral Debt Swaps - The instruments total US$ 16 Trillion - Please note - it is 'T',
not B.
As we are entering era of 'Financial turbulence', not sure when CDS will implode. Better fasten your seat belts and sit tight!!

Worst is yet to come we havnt even started yet
This crash will start from april 2009 as per reports

i think infy will b amassin a lot of wealth wid d currnt financial crisis forget abt d loss...tho LB has gone bankrupt ML is now integrated wid BOA....which is one of the BIGGEST clients of infy...as infy maintains its reputation wid its clients and rebusiness amounts to over 97% of Infy's revenue...i hav a little doubt dat ML's sw needs will b met by any odr IT giant.

dis is one of the reasons y Infy's ADR shot up by 10% ystrday.

Indian IT giants are not at a big loss.. The condition of the Global banks are in a mess.. Thousands of Employees of the Banks have a dangling future.. With the Lehman Brother going bankrupt and AIG on the verge of that Also selling of Merill Lynch to BAnk of America has created panic among others I-banks

situation is also grim in many indian b schools especially at IIMB as it had recurited 13 people from there as final placement and interships . Though no official confirmations has been done but still the fear is high...

Article from New york times regarding lehman brothers

Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala. The firm moved to New York City after the Civil War and grew into one of Wall Street's investment giants, despite period brushes with death. On Sept. 14, 2008, the investment bank announced that it would file for liquidation after huge losses in the mortgage market and a loss of investor confidence crippled it and it was unable to find a buyer.
Lehman's slow collapse began as the mortgage market crisis unfolded in the summer of 2007, when its stock began a steady fall from a peak of $82 a share. The fears were based on the fact that the firm was a major player in the market for subprime and prime mortgages, and that as the smallest of the major Wall Street firms, it faced a larger risk that large losses could be fatal.
As the crisis deepened in 2007 and early 2008, the storied investment bank defied expectations more than once, just it had many times before, as in 1998, when it seemed to teeter after a worldwide currency crisis, only to rebound strongly.
Lehman managed to avoid the fate of Bear Stearns, the other of Wall Street's small fry, which was bought by JP Morgan Chase at a bargain basement price under the threat of bankruptcy. Lehman and Bear Stearns had a number of similarities. Both had relatively small balance sheets, they were heavily dependent on the mortgage market, and they relied heavily on the "repo" or repurchase market, most often used as a short-term financing tool.
But by the summer of 2008 the rollercoaster ride started to have more downs than ups. A series of writeoffs was accompanied by new offerings to seek capital to bolster its finances.

i think infy will b amassin a lot of wealth wid d currnt financial crisis forget abt d loss...tho LB has gone bankrupt ML is now integrated wid BOA....which is one of the BIGGEST clients of infy...as infy maintains its reputation wid its clients and rebusiness amounts to over 97% of Infy's revenue...i hav a little doubt dat ML's sw needs will b met by any odr IT giant.

dis is one of the reasons y Infy's ADR shot up by 10% ystrday.

situation is very very grim in USA and is having a havoc on india especially IT sector where almost 25k jobs are likely to be cut following LB collpase.
Most of the indian IT companies which get orders from these financial powerhouses have very less order pipeline and with bench strength of over 20% more than 50k jobs can be cut in IT sector in 6 months.

many other banks like citibanks,washington etc are likely to go bankrupt sooner than later..Infact almost 1000 banks r gonna close down as per Ross

Wilbur Ross sees a thousand bank closure chances- International Business-News-The Economic Times

God helps us:boat:

It is not exactly the greatest of times if you want to take up a financial profile now, but come to think of it it will be placement time in 2011 for you which is a really long long time for anyone to predict the state of the economy. So go by your gut feeling. Just map your ability to the best college it could help you get into. I would not take up a tier 2 college. Stretch upto top 15 nothing lower than that. Its just my personal opinion.

Hello guys

need your help, do you think this is the right time to go for mba, especially for someone who is earning 4 lakh and if he is going to a tier 2 or tier 3 college

leaving a secure job and after 2 years, another job hunt if economy goes like this

what are your suggestions, should i go for mba or not if i get into second rung colleges

Hello guys

need your help, do you think this is the right time to go for mba, especially for someone who is earning 4 lakh and if he is going to a tier 2 or tier 3 college

leaving a secure job and after 2 years, another job hunt if economy goes like this

what are your suggestions, should i go for mba or not if i get into second rung colleges

try to aim for top 20-25 colls.. uske neeche toh it might be of no use...