According
to the Star Online on September 12, Lehman Brother 5 years since it collapse
was an anniversary without a celebration. It was just a memorable day to all
banking, economists and people from all around the world, which they hope they
would not experience the same fate. Lehman Brother filed for bankruptcy five
years ago after facing the worst crisis which has led to tumbling of many
others such as the breaking of the buck in money market, and the near collapse
of Goldman Sachs and Morgan Stanley that led them to become banking holding
companies.
After
five years, US economy has stabilized and moderately building up their
financial system stability where the industry is raising up, housing market is
increasing, banks started to stable and people in America started to spending
relatively. Even though the fall of US
investment banking have left a great impact to worldwide, the government made a
quick decision in bringing in more than US$420bil to support other banks and automakers
General Motors and Chrysler which help to save more than hundreds of thousands
jobs lost.
As the economy collapse, unemployment rate rocketed
up to 9.8%. With high cost living, the
government rises up the gross domestic product from 3.2% to 10.1% by 2009. In
addition, while having the new administration of President Barrack Obama in
February 2009, USD$787bil were marshaled to boost consumption and support the
demolished of housing industry. Even if
the home prices remain well, millions of families avoided losing their houses
and many more still struggling in making payments. Besides that, retirement saving has
drastically fallen through out the year. A part of that the fundamental motor
of the US economy was still growing mainly because of household wealth. The
moment of Lehman fallen has been a depressing failure that make the government
to work more harder than before as an effort to recover the financial crisis.
Based on
my opinion on this article I found that Lehman Brother does shake the economy
not only to the government and US but also global economy was badly been
affected. As I may not know much about the Lehman Brother organization and the
fundamental reasons of the collapse I was wondering when Lehman Brother started
the business many took advantage of it, or got the advantages but when it
collapses no one suggested saving it. According to Colin Bar, in his article
the fed Chief Ben Bernanke
clarify that the fed rescued AIG instead of Lehman Brother because of risks of
gaining large loss as AIG at that moment was believed to be an Insurance
Business remained a going concern which they have sufficient collateral to
borrow to fed with low risk of tax payers. Therefore, I assumed that the
government made an aggressive approach of not saving Lehman for saving much
more banks, financial system and people in US.
Furthermore,
Because it is one of the biggest US investment banking in Housing industry it
effected not only to he financial system but also unemployment rate, increasing
of living cost, losing or buying a house become a very big concern and US
increased the amount of national debt. Moreover, it’s been the most serious
financial crisis since the Great Depression that has increased the unemployment
rate in US. For instances, Up to 25,000 people reported to loss their jobs and
barely to survive in their living expenses and faced difficulty in making
payments. In the Journal National article written by Matt Berman reported that the
President Barrack Obama said, “is that we're not near where we need to be”. The
slow recovery of long-term unemployment since the start of recession has makes
the unemployment rate be difficult to reduce.
As for
over the previous years, the numbers of long-term unemployment has dropped by
733,000 to 4.3 million people in August. Based on my understanding of this
article, Although it is obviously that the economy today isn’t bad as it is was
five years ago, many people have come back from that crisis but the rate of
unemployment still haven’t change. As the
government made quick move to saving hundreds of thousand jobs, but are still
people who are jobless. People with higher qualifications does not care what
kind of job opportunity they have, they just grab any job to obtain the monthly
salary. Minimum salary is a good thing rather than become jobless and
penniless. Thus, What has
the government or the President has done? I may have to do more research on
this issues but it was a good exposure to start off my studies on Financial PR.
