A man leaves the Lehman Brothers headquarters carrying a box,  Monday, Sept. 15, 2008 in New York. Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 protection in the biggest bankruptcy filing ever on Monday and said it was trying to sell off key business units. (AP Photo/Mary Altaffer)
Ugly day: the demise of Lehman Brothers ruptured the entire financial system, having a domino effect on credit lines worldwide and sinking the major exchanges into a sea of red.

Lehman trader's warning ignored



Larry McCarthy sat at a table at Lehman Brothers in 2007 and spelt out the dangers that the Wall Street blue chip company was facing. Exposed to mounting subprime mortgage liabilities, the fourth-floor bond trader shocked the executives with three prophetic sentences that would come back to haunt them. "You see that right there?" he pointed hypothetically towards the window. "That's an ? iceberg and we're headed straight for it, flank speed. Even the ? Titanic tried to swerve."

His warning was ignored. Lehman simply carried straight on, at least for another 12 months, before breaking up on September 15 last year after filing for bankruptcy following losses of up to US$5 billion (Dh18.36bn). In the end, the 250-year-old New York investment bank not only hit the iceberg, it ruptured the whole financial system. The aftershocks from Lehman's demise set off tremors throughout Wall Street. Uncertainty surrounding its transactions with banks and hedge funds sparked a crisis of confidence.

In turn, that froze credit lines across the world, forcing governments to step in to try to calm spooked markets. The next 48 hours saw major exchanges sinking in a sea of red. On September 15, the Dow Jones Industrial Average in New York fell 504 points, or 4.4 per cent. It was the biggest one-day drop since September 17, 2001, when the market reopened for trading after the September 11 attacks on the US.

"It was an ugly day," James King, the president and chief investment officer at National Penn Investors Trust, said after the closing bell. "Lehman's failure to find a suitor really stoked the fears of the public. Investor confidence is at the lowest point we've seen in a while." Art Hogan, the chief market strategist for Jefferies, went even further. After witnessing the carnage on the trading room floor, Mr Hogan stressed that the magnitude of the fallout was unprecedented and could only be compared with the Great Depression of the 1930s.

"We've never witnessed this before," he said. "There's no road map for this." Across the Atlantic in Europe, September 15 was renamed "Manic Monday" as the FTSE 100 in London dropped 3.5 per cent and the CAC 40 in Paris fell 3.8 per cent. "The landscape has changed, and a lot of the major players who were are no more, so of course people are panicked," said Stephen Leeb, the president at Leeb Capital Management.

A day later, the crisis deepened when American International Group (AIG) was handed an $85bn lifeline by the US Federal Reserve after filing for bankruptcy. In the previous nine months, AIG had lost $18bn and 91 per cent of its stock value. But unlike Lehman, the biggest insurance company in the US was considered too big to fail, with 74 million clients in 130 countries. "If AIG fails and can't make good on its obligations, forget it," Robert Bolton, the managing director of Mendon Capital Advisers, said at the time. "It's as big a wave as you're going to see."

By the end of the month, that "wave" had washed over global markets, threatening to submerge the financial system, before subsiding. A year later, the haemorrhaging has stopped but the slow drip of rising unemployment has seen the Credit Crunch morph into the Great Recession, with a worldwide recovery still beyond the horizon. For Lehman Brothers, that day will never come. Perhaps Paul Samuelson, the famed American economist and Nobel Prize winner, captured that mood of Black September the best when he said: "What we know about the global financial crisis is that we don't know very much."

* with agencies

The specs

Engine: Two permanent-magnet synchronous AC motors

Transmission: two-speed

Power: 671hp

Torque: 849Nm

Range: 456km

Price: from Dh437,900 

On sale: now

UAE athletes heading to Paris 2024

Equestrian
Abdullah Humaid Al Muhairi, Abdullah Al Marri, Omar Al Marzooqi, Salem Al Suwaidi, and Ali Al Karbi (four to be selected).


Judo
Men: Narmandakh Bayanmunkh (66kg), Nugzari Tatalashvili (81kg), Aram Grigorian (90kg), Dzhafar Kostoev (100kg), Magomedomar Magomedomarov (+100kg); women's Khorloodoi Bishrelt (52kg).


Cycling
Safia Al Sayegh (women's road race).

Swimming
Men: Yousef Rashid Al Matroushi (100m freestyle); women: Maha Abdullah Al Shehi (200m freestyle).

Athletics
Maryam Mohammed Al Farsi (women's 100 metres).

Company Profile

Name: HyveGeo
Started: 2023
Founders: Abdulaziz bin Redha, Dr Samsurin Welch, Eva Morales and Dr Harjit Singh
Based: Cambridge and Dubai
Number of employees: 8
Industry: Sustainability & Environment
Funding: $200,000 plus undisclosed grant
Investors: Venture capital and government

Sarfira

Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal

Rating: 2/5

Could We Be More

Artist: Kokoroko
Label: Brownswood Recordings
Rating: 3.5/5

KEY DATES IN AMAZON'S HISTORY

July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to Amazon.com, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the Amazon.com platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone

UAE SQUAD

Jemma Eley, Maria Michailidou, Molly Fuller, Chloe Andrews (of Dubai College), Eliza Petricola, Holly Guerin, Yasmin Craig, Caitlin Gowdy (Dubai English Speaking College), Claire Janssen, Cristiana Morall (Jumeirah English Speaking School), Tessa Mies (Jebel Ali School), Mila Morgan (Cranleigh Abu Dhabi).

MATCH INFO

Championship play-offs, second legs:

Aston Villa 0
Middlesbrough 0

(Aston Villa advance 1-0 on aggregate)

Fulham 2
Sessegnon (47'), Odoi (66')

Derby County 0

(Fulham advance 2-1 on aggregate)

Final

Saturday, May 26, Wembley. Kick off 8pm (UAE) 

EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE

Edinburgh: November 4 (unchanged)

Bahrain: November 15 (from September 15); second daily service from January 1

Kuwait: November 15 (from September 16)

Mumbai: January 1 (from October 27)

Ahmedabad: January 1 (from October 27)

Colombo: January 2 (from January 1)

Muscat: March 1 (from December 1)

Lyon: March 1 (from December 1)

Bologna: March 1 (from December 1)

Source: Emirates


Latest
Most Read
Top Videos