US still in mend: 5years of Lehman Brother collapse

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.