By Patrick Robinson, Lawrence G. McDonald

ISBN-10: 0307588335

ISBN-13: 9780307588333

One of the largest questions of the monetary trouble has no longer been spoke back earlier. What occurred at Lehman Brothers and why was once it allowed to fail, with aftershocks that rocked the worldwide economic climate? during this news-making, frequently wonderful booklet, a former Lehman Brothers vice chairman provides us the instantly answers—right from the stomach of the beast.

In A substantial Failure of universal Sense, Larry McDonald, a Wall road insider, finds the tradition and unstated principles of the sport like no booklet has ever performed. The ebook is couched within the very human tale of Larry McDonald’s Horatio Alger-like upward thrust from a Massachusetts “gateway to nowhere” housing undertaking to the recent York headquarters of Lehman Brothers, domestic of 1 of the world’s hardest buying and selling floors.

We get a close-up view of the members within the Lehman cave in, in particular those that observed it coming with a helpless, offended simple task. We meet the Brahmins on the most sensible, whose reckless, pedal-to-the-floor habit to development eventually demolished the nation’s oldest funding financial institution. The Wall road we come across here's a ruthless position, the place brilliance, vanity, ambition, greed, potential for relentless toil, and different human characteristics mix in a powerful combine that typically fuels prosperity yet sometimes destroys it.

The complete importance of the dissolution of Lehman Brothers continues to be measured. yet this a lot is sure: it used to be a devastating blow to America’s—and the world’s—financial approach. And it don't need to have occurred. this can be the tale of why it did.

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Additional info for A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers

Sample text

If not properly managed, a series of defaults by shadow banks or their clients can affect foreign banks and investors, as well as domestic confidence. Furthermore, closer regulatory supervision is needed to tackle the moral hazard implications of shadow banking financialization, Ponzi and get-rich-quick schemes, and usurious lending that exploits the poor. Overall, barring any sudden shocks, we envisage that China’s shadow banking problem is still manageable, although the central government may need to step in to restructure some of the local government debts and return them to stability and productive growth.

Of particular concern is the structural decline in world trade, which is becoming less responsive to changes in global income. The IMF (2015a) also lowered its global growth forecasts, noting that positive factors such as lower oil prices will be more than offset by persistent negative forces, including lower investment and slower potential growth in many coun­ tries. A key concern of the IMF (2015b) is the risk of a “new mediocre” – a prolonged period of low growth. ” Some commentators have suggested that China’s “Lehman moment” is imminent and that the Chinese shadow banking sector could become the cause of the next systemic global financial crisis.

This chapter also highlights the complex intercon­ nections and feedback loops between shadow and commercial banks as a potential source of fragility in the financial system. The chapter highlights that there is a divergence of views over the role of shadow banks in the emerging markets vis-à-vis the advanced countries and therefore the WEBC01 05/04/2016 6 20:2:58 Page 6 SHADOW BANKING IN CHINA issue of risks and supervisory oversight will be different from those in the advanced markets. Chapter 3.

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A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Patrick Robinson, Lawrence G. McDonald

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