America’s forth largest investment bank Lehmen brothers collapses and its 25,000 workers are the first to feel its effects. Their loss of employment is just one consequence of the failure of the 158 year old institution… it’s caused ripples of fear and uncertainty across the world’s money markets.
And its left the ordinary man in the street is a state of bewilderment: “Now the federal government is picking up all the marbels for the losses. ‘‘Im wondering if the fed government had anything to do with lowering the standards in the first place to allow everyone to have the American dream which is now turning into the American nightmare.”
And amid fears that it could become the next sub-prime victim, Meryll Lynch has agreed to be taken over by Bank of America in a deal worth 35.5 billion euros.
It was the pullout of Bank of America along with Barclays from take over talks with Lehmans that triggered the bank to file for bankruptcy. The two got cold feet when the US treasury said it was opposed to using government money to clinch the deal.
Oliver Roth, finance analyst said: “ In Europe and America I can see more bank crashes. In my opinion there is further necessity for write offs. Real Estate prices in the US, which are the trigger for the crisis, keep dropping and that’s why I can imagine some institutions in the US and Europe for example UBS will need massive write offs and slide deeper into crisis.”
As money markets world wide reacted negatively, The European Central bank said it was monitoring developments, and in a bid to stabilise things, immediately injected 30 billion euros into the system.