Joseph Tibman was a senior banker at Lehman Brothers for 20 years and is now the author of “The Murder of Lehman Brothers, An Insider’s Look on the Global Meltdown”. Tibman writes under a pseudonym to preserve his ability to work in finance. The views expressed are his own.

September 12, 2008 was a Friday like no other.

Just one day earlier, I was somewhat concerned about the hammered Lehman Brothers share price and the persistent rumors about my firm, but I had been here before. Well not exactly here. But I was sure Lehman would survive as an independent firm.

Had I overdosed on the Lehman-distributed talking? Soon after I arrived at my office in the Lehman headquarters at 745 Seventh Avenue on the north end of Time Square, it was clear my world, and that of all those around me, was spinning off its axis. The word was out. The Federal Reserve Bank and U.S. Treasury were in the building. So were Bank of America and Barclays Capital. Or were they?

What did it matter where they were? This was it. Two of our competitors, far weaker in investment banking, were negotiating to buy us. All I can remember, even after just a couple of months, is obsessively trading Blackberry messages with restless colleagues and perpetually scanning television general and business news channels for just one more sliver of incremental info, for hope. My world had stopped rotating.

Throughout the weekend, our Blackberries continuously hummed, expressing the collective freak-out. Then a bombshell dropped. Merrill Lynch was to be acquired by Bank of America in a government-brokered deal. We were toast. We would fail. If there were to be a Lehman deal, it would have been announced at the same time. Fail. This was surreal. On Sunday, many of us rushed to the office to retrieve personal possessions, just in case we were locked out on Monday. The firm had not yet been pronounced dead, but the Lehman I had long made my second home was teetering on the brink.

It deeply troubles me that my second home for twenty years was the lynchpin that detonated a global meltdown. I anticipated a slew of tabloid books that would over-simplify. I felt I had to do something. So I decided to write my account of the events — one that lets no one off the hook, but also tells the world in plain English what really went down and what we need to fix.

The easing of the credit crisis is giving way for a new generation of sovereign wealth funds.

Japan, Taiwan, Thailand, Bolivia, Nigeria, Canada are just some of the places where a public debate has begun on establishing some form of sovereign wealth fund. And even Scotland is now looking at establishing such a fund to manage oil wealth.

China is also close to launching an agency to restructure and consolidate state-owned enterprises — dubbed by Chinese media as CIC 2.0 in reference to the country’s $200 bln SWF China Investment Corp.

Ashby Monk, expert on SWFs and research fellow at Oxford University, says the crisis may have highlighted the importance of having SWFs and having extra cash to deal with the emergency.

“There is this appetite for governments to set up new SWFs. Certain countries have taken considerable utility from having SWFs and a pool of cash during the crisis,” he says.

“Coming out of this crisis, we are going to see SWFs increase in the same way central bank reserves increased coming out of the 1997 crisis. All these new funds may be the conduits for a real dramatic ramp-up of sovereign wealth funds.”

And the projected growth of the SWF industry is eyebrow raising. The industry is set to double its size to $7 trillion in the next 10 years, according to Deutsche Bank estimates. And there’s no doubt that SWF2.0 will help the growth.

Greedy bankers are routinely blamed for the credit crisis but one British-based poll of — well, financiers — spreads the blame more widely.

Gary Jenkins, head of fixed income research at Evolution Securities, wanted a more specific scapegoat and ran a poll of about 200 mostly fund managers and investors asking them to pick their credit crisis culprit. Former U.S. Federal Reserve Chairman Alan Greenspan was the clear winner, picking up 35
percent of the votes. He has been widely criticised over the past year for low interest rate policies that helped fuel the credit boom.

Former U.S. president Bill Clinton also figured quite prominently with about 10 percent of  votes, and British prime minister Gordon Brown got quite a few.

Some bankers were singled out, including Fred Goodwin, former chief executive of Royal Bank of Scotland and Richard Fuld, the head of collapsed Lehman Brothers.

In a related article in Euroweek, Jenkins also had a unique culprit — Bill Gates of Microsoft. None of the maths behind structured credit could be done without spreadsheets like Excel, Jenkins reckons.

So who do you think is to blame?

(Reuters photo: Kevin Lamarque)

The International Monetary Fund’s bumbled calculations on the financing needs of some eastern European countries revealed last week were met in Austria with disbelief, ridicule but also a quiet smile.

The IMF said it had overstated external financing needs of some countries in its Global Financial Stability Report, released on April 21, largely because of double-counting errors. The corrections have trickled in.

Worrying reports earlier this year indicating west European banks had lent $1.7 trillion to IMF-bailed-out states like Ukraine and Hungary worsened a steep selloff in the region’s assets. Policymakers lashed back at the time, saying the fear was blown out of proportion.

The IMF mistakes were front page news in many newspapers – especially in Austria, where the exposure of its banks to the emerging Europe region has been a topic of fierce debate.

Austrian banks have lent the equivalent of 70 percent of the country’s gross domestic product to emerging Europe and the exposure has driven market concerns that they could need a massive government bailout. The worries have driven up the price of Austrian government debt and prompted some, like U.S.economist Paul Krugman, to speculate that Austria could be on the brink of default.

This has made the Austrian central bank pretty angry, not to mention rankling politicians, bankers and the media. This one in The Telegraph really got them going.

Even before the IMF correction, many in Austria blamed an Anglo-American conspiracy trying to divert attention away from their own banking troubles by painting a bleak picture of Austria’s stake in emerging Europe.

“Would we be better off if we were active in the United States, in Great Britain or in Germany?,” Herbert Stepic, the chief executive of emerging Europe’s No.2 bank Raiffeisen International asked last month. ”I can only say: categorically no.”

So the financial stability of the emerging Europe region, a motor of Austrian growth in recent years, is close to the Alpine republic’s heart and the IMF mess-up gave room for a touch of Schadenfreude.

“An embarassing calculation mistake — (Finance Minister) Proell sees himself justified,” on state broadcaster ORF, “Not the first mistake” popular daily Kurier and Die Presse  said, pointing out a previous IMF miscalculation and emphasising Austria’s battle against the negative flow of news from the region. 

“There is a serious risk that policymakers will now use this in order to avoid addressing the issues that have been there all the time,” said Lars Christensen, Emerging Markets Chief Analyst at Danske Bank.

Austria likes to point out that ratings agencies have confirmed its triple-A debt rating and have dismissed concerns of a downgrade like that of fellow eurozone member Ireland — let alone the prospect of an Iceland-style default.

When the IMF got its figures on Eastern Europe wrong, Central Bank Governor Ewald Nowotny also told Die Presse newspaper that he felt his position strengthened.

“We just couldn’t believe it,” he is quoted as saying in reference to the original figures. He does add that the IMF is a reputable institute and that the exposure problem should not be dismissed “We have to be realistic and say there are big problems in the region, one of them being the proportion of credit in foreign currencies as a proportion of total credit,” he said.

Nowotny has been keen to make clear the distinction between different countries in the region and stresses over and over again that Austrian banks are stable, invested mainly in EU member states, that Austria has a banking package and will not pull out of the region.

“It’s highly embarrassing that the IMF made this slip-up and it has led some to question whether Central and Eastern Europe was in such bad shape. But the numbers have been blown out of proportion in both directions.” Christensen from Dankse Bank said.

Worries about the region cannot be based or dismissed using just these figures, he says. Concerns are based on more than one set of data. “But the revised IMF figures are still pretty terrifying.”

It is sure to be a topic when IMF Managing Director Dominique Strauss-Kahn visits Vienna later this week. 

International Monetary Fund Managing Director Dominique Strauss-Kahn, Washington, April 26, 2009. REUTERS/Yuri Gripas

Austrian Vice Chancellor and Finance Minister Josef Proell, Vienna, May 12, 2009. REUTERS/Leonhard Foeger

Austrian central bank (OeNB) Governor Ewald Nowotny, Vienna, December 9, 2008. REUTERS/Heinz-Peter Bader

Los Angeles-based designer Jonathan Jarvis has created a great animated video explaining the credit crisis, produced as his part of his thesis at the Art Center College of Design:

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

If you prefer your explainers audio-only, you can't go wrong with "The Giant Pool of Money" and "Bad Bank," from Alex Blumberg and Adam Davidson of Planet Money.

Attention Wall Street whistleblowers: your banking job might be at risk, but here's your shot at Hollywood stardom.

The Academy Award-winning filmmaker is looking for “brave” financial industry insiders to help him make his next film which will focus on the financial crisis – or what Moore calls “the biggest swindle in American history.”

“Based on those who have already contacted me, I believe there are a number of you who know "the real deal" about the abuses that have been happening. You have information that the American people need to hear, “ Moore said on his website.

He called on those working for banks, brokerage firms or insurance companies to “participate in the telling the greatest crime story ever told” by contacting him.

The director, who took on the gun lobby in Bowling for Columbine in 2002, the Bush administration in his controversial 2004 documentary Fahrenheit 9/11 and the U.S. healthcare system in his 2007 polemic Sicko, pledged to protect the identities of those who step forward.

Moore says the unnamed film – currently in production – will shed light on the “abuses” that have led to crisis, which has claimed Wall Street giants Lehman Brothers and Bear Sterns and prompted a government bailout worth hundreds of billions of dollars.

“I just can't say much right now. I'm sure you can understand why. One thing I can tell you is that you're gonna like this movie when I'm done with it," he says.

-- By Sebastian Tong

It's the poorest country in Europe and its main export is alcohol but it can still beat the world's largest economy when it comes to financial muscle. Yes you've guessed it, Moldova trumps the United States in the Banker magazine's 2009 World Financial Health Index.

Caution is the watchword of the magazine's latest index, which is careful not to reward financial risk-taking. According to the Banker's new model, Moldova, Chile, Bolivia and Peru are less likely to be affected by the global financial storm than the U.S., UK or Japan.

Small is beautiful when it comes to debts and that's where Moldova wins. Its debt is $763 per capita, compared with the UK's $171,000. Its banks have only extended loans worth 35 percent of GDP, while in the mighty U.S., the figure's 230 percent.

Moldova pays 2.8 percent of public sector revenues to service government debt, compared with Italy which spends 11.9 percent on interest payments.

The rule of thumb may be that if your economy has never been fully developed, it has far less potential to crash.

An old Chinese proverb states that it is better to take many small steps in the right direction than make a giant leap and fall back. Judging by the number of bank lending initiatives announced over the past three months, British policymakers are taking this to heart.

On Monday, Britain announced no fewer than eight measures to kickstart lending in its credit-starved economy. Despite pouring 37 billion pounds of public money into major banks last October and pledging hundreds of billions more in guarantees, the government had to admit it needed to take more credit risk off banks’ books.

Monday’s package is designed to be comprehensive.  It includes — amongst other things — a fund to allow the Bank of England to lend directly to businesses, a framework for boosting the money supply if needed, a guarantee scheme for asset-backed securities and the offer of insurance against potentially explosive losses.

None is a silver bullet and the devil will be in the detail. Much of the nitty-gritty of how these measures will work is still not known. 

 It is also likely to be a slow process. The Bank of England’s 50 billion pound asset-buying pot is one of the few measures to take effect immediately.  Analysts at BNP Paribas calculate this equates to just 2 percent of bank lending in Britain compared to a ten percentage point drop in lending in the last year.

One opposition politician, Vince Cable, likened attempts to kickstart bank lending in Britain to “giving a kiss of life to a corpse.” Colourful. But a revival in bank lending is indeed by no means assured. More steps may yet be needed.

It seems like only yesterday that U.S. Treasury Secretary Henry Paulson was up on Capitol Hill, asking Congress for a mere $700 billion to buy bad assets that were clogging up lending. The so-called Troubled Asset Relief Program isn’t buying troubled assets, but the TARP acronym lives on.

Until now. Thanks to Stephen Stanley, chief economist at RBS Greenwich Capital,

“Given that TARP is no longer an appropriate acronym, I propose to start a contest to rename the program,” Stanley said. “My submission is BEAST. Bail out Everyone And Sink the Taxpayer. Unfortunately, there are no prizes in this contest, but feel free to play.”

Send us your best ideas and we’ll be glad to forward them along.

Charles Dallara knows he is not very popular these days. The head of the Institute of International Finance, a lobby group representing many of the world’s biggest banks, offered up some advice for Group of 20 heads of states gathering in Washington this weekend — along with a measure of humility.

“I’m not sure that a message from the global bankers is exactly what is on the top of their wish list to receive before the meeting, given the role that financial institutions have played in this crisis,” he said at a press conference.

Dallara’s group wants government to back off from the private sector as soon as the financial crisis permits, but bristled at suggestions that banks have not done enough to acknowledge their part in the crisis or accept the need for tighter regulation.

“We’ve been rather brutal in our own industry self-criticism that some of these practices were not at all compatible and consistent with sound banking practices,” he said. “I don’t know what else we could do other than to get up here with some whips and take turns with lashes.”

Tempted anyone?