Certainly when you were watching the news today or read a newspaper this morning you could not avoid learning that the next “most prominent” victims of the current banking crisis were biting the dust.
I was quite interesting what kind of nonsense was pushed around in the mainstream media to calm down Mr & Ms Jones concerns about their money in the bank – one commentator / self-proclaimed expert was even thickheaded enough to say that “…nothing to fear, only those directly invested in stocks of the bank might be loosing some money…”. Well you clown, only a minute before they where showing intra-day losses of almost 90%. Those so-called experts are even loosing their entertainment value the more of the mess is pushing up through the gullies.
With regards to the Merrill Lynch / BofA merger (Who??? is buying whom???) we will see over the next months if that move will allow BofA to make some of the dirt in their nostro / portfolios / liabilities disappear or if there are some more really bad surprises within Merrill Lynch’s books.
Regarding Lehman much could be said about the change of corporate values (e.g. after the Shearson – Lehman – Amex merger, if the 2003 SEC settlement hasn’t told you enough), about greed and the never ending tulip trade. But what did surprise us a bit was the sheer size of the debt accrued by Lehman as reported in the Chapter 11 filings. And that of course was nowhere mentioned in the mainstream media.
For those interested in the facts here’s a link to an overview of the filing at Bloomberg.
Some core details:
- Biggest Bankruptcy in US history
- more than $613 billion of debt
- Lehman owes its 10 largest unsecured creditors more than $157 billion
From the Bloomberg article:
“…Fuld, the longest-serving CEO on Wall Street, attempted to shore up the firm’s finances in the second quarter by raising $14 billion of capital, selling $147 billion of assets, increasing cash holdings and reducing reliance on short-term funding to create a buffer against a bank run….
the image above depictures Emanuel and Mayer Lehman, the founders of Lehman Brothers
- Visualizing the size of the banking crisis
- Animation: The Banking system
- Data-visualization: Charting The Banking Crisis
- US Credit Crisis: Fed borrowing shown as a chart
Sizing the issue at hand seems to be the first problem. Banks keep the so called derivatives off their balance sheets (because when looking at it with a sense of black humor these instruments are a bit like the banks’ own print run of casino chips – As long as others exchange them freely for real money that’s what they are worth. When that situation changes their value changes too – well, worst case to nothing or – better said, whatever someone is willing to pay for the illusion of value)…
As the FDIC has yesterday closed another bank (First Priority Bank) the eight US bank that failed this year, we thought maybe this series on the banking system might be inspiring.
It’s about 50min long and a mixture of animations and images. Anybody having a strong believe in the infallibility of our current economic systems and societies should be warned that this is not too positive about the banking system. Besides that with the…
The web log “And Still I Persist” has made two interesting implementations available that demonstrate how data-visualization tools similar to “Gapminder’s Trendalyzer” can be used to show patterns in vast amounts of data.
They used OSG’s Boomerang technology to show changes in banks’ mortgage portfolios based on the data the banks have reported to the FDIC. The first chart / animation shows the amounts of 90+ days late mortgages and the second one visualizes the changed amounts in mortgages that…
If you would like to see the “official version of how much money the Fed is pumping into banks and financial institutions recently, have a look at the chart below.
The gray shaded areas are times officially recognized as recessions. The underlying data is available at the St. Louis Fed web site together with a charting application that allows you to further customize the range and other parameters.
To better visualize the substantial change we have split the data into two charts:
The larger chart shows the borrowing from the FED for the period 1919 to 2007 and the smaller one data for 2008 only. As you can see during these almost 90 years borrowing remained continuously within a range of almost none to max 8 Billion USD per month.
Since the beginning of 2008 the numbers have drastically changed and are now at about 155 Billion USD per month. The monthly figures for 2008 in detail…