DealZone

Lehman and its aftermath, by the numbers

September 10, 2009

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With apologies to Harper’s Index, some collected statistics on the collapse of Lehman and the roller-coaster year that followed.

Add your own significant digits in the comments section.

***

Number of siblings who made up the original Lehman Brothers, founded as a dry-goods store in 1844:

3

Age of Bavarian immigrant Henry Lehman when he founded the business:

23

Percentage difference between the DNA of former Lehman CEO Dick “The Gorilla” Fuld and an actual gorilla:

1.6

Lehman assets listed in its record bankruptcy filing:

$639 billion

Assets listed in the second-largest U.S. corporate bankruptcy filing of Worldcom

$107 billion

Pounds of yellowcake uranium left on Lehman’s books from a commodity trade:

450,000

“Buy it now” price of Lehman Brothers humidor on eBay:

$62.99

Rank of Giants Stadium LLC in the list of Lehman claimants:

7

Number of Wall Street institutions compared to a “great vampire squid wrapped around the face of humanity”:

1

Size of actual vampire squid, in feet:

1

Estimated ratio of Goldman Sachs bankers to other bank representatives at emergency government meeting to save AIG:

3

Amount of money former Merrill Lynch CEO John Thain spent renovating his office:

$1.22 million

Amount of the renovation budget devoted to an antique “commode on legs”:

$35,115

Percentage of global wealth destroyed by the credit crisis, according to Blackstone CEO Stephen Schwarzman in March, 2009:

45

Percentage losses for investors who bought Blackstone shares at $31 IPO price:

56.5

Number of knees that Treasury Secretary Henry Paulson got down on to beg House Speaker Nancy Pelosi to support the bailout bill:

1

Per capita U.S. bailout funds provided to Fannie Mae and Freddie Mac:

$313.44

Per capita U.S. funds provided to AIG:

$228.97

Amount of bonuses received by 73 AIG executives in March, 2009:

$165 million

Number of bathrooms in AIG CEO Robert Benmosche’s Croatian villa, shown during a tour in which he railed against “lynch mobs with pitchforks” who protested the bonuses.

12

Comments
18 comments so far | RSS Comments RSS

You CANNOT destroy wealth with a stock market crash. You can only transfer it to someone else. The only possible scenario to wealth destruction would be if a person bought a stock at 100 at IPO and it inflated to 200 and then crashed to exactly 100. Otherwise the wealth is moved around between the buyers and sellers. Given the way wall street works under the guise of moving investments for greater gains you can guarantee that almost the entire wealth of the crash was not destroyed simply defaulted back to the last person to sell it. So that percentage of global wealth lost 45% figure, is a lie.

Posted by Jonathan | Report as abusive
 

So if wealth cannot be destroyed, but rather is simply moved around, perhaps wealth falls under the same fundamental laws of physics as energy, e.g. energy cannot be created nor destroyed, it can only be stored, released, converted from one for to another.

This I find it interesting that out of all of the numbers so far presented, there has only been a challenge to one of them. To call that one a “lie” is probably not as correct as stating that the author of the feedback comment sees things differently than the editor of the list of “statistics.”

Posted by Tony K | Report as abusive
 

Lehman brothers should return to business in a few years
God bless America

Jesus bless the world

Nicola(www.lordmovie.com)

 

The percentage of people that truly understand why this happened. .003%, most likely fewer!

Posted by Rich Johnson | Report as abusive
 

I agree with Jonathan. Wealth cannot be destroyed with stock movement. The correct wording of the statistic should have been: Percentage of global wealth stolen from people who earned it by greedy Wall street SOB’s.

Posted by Thomas | Report as abusive
 

Jonathan,

You obviously have no idea what a wrtie-down is. It is value vaporize into thin air. Wealth most certainly can be destroyed, and all it takes is a simple down grading by an analyst.

Posted by Pencil NEck | Report as abusive
 

Thomas, you live in a very simple world.

Wealth (money) is not a zero-sum commodity. Accordingly, the size of the pie, so to speak, is forever expanding and forever contracting, influenced by the value that each person contributes or drains. In one sense, you are correct: wealth can be drained by theft. This is, however not the only drain. There are actions that do not “steal” wealth from the system but clearly reduce the total value of the pie. Consider 9/11 (because today is 9/11/09, not because I’m a conspiracy nut). Nobody absconded with bags of money at the instant of the attack. Wealth (presumed value) was destroyed. The fact is, your stocks aren’t worth anything more than the price a man is willing to pay for them at this instant. The next instant they may be worth more, or less. The price of a stock is a calculated estimate of the value of the ownership of a piece of a company. When the company is perceived to be prospering, more people are interested in owning pieces of that company and the perceived value of your piece increases. When the company is perceived to be floundering then the opposite occurs. When (as with 9/11) the system get shocked, that price goes down (or up if you’re fortunate enough to be in a few rare industries). Be honest with yourself. Did anyone steal from you? Nope. Your wealth (which never truly existed) has vanished.

Not to complicate the matter, but there is a corollary which begs to be elucidated. You’re not wrong to feel as though someone has stolen from you, for the fact is that you have been robbed. The key point is that true theft can only occur when real value is taken from you by force or deception and retained by the thief or distributed among those who did not create or earn the wealth. I trust I needn’t further explain why the “bailouts” more closely match this description than your withered portfolio.

P.S. You might consider reviewing the differences between mercantilism and capitalism. A lot has happened in the last 350 years.

Posted by matt | Report as abusive
 

I’m agree with Jhonatan, so basic in your comments who commit the atrocity to steal the 45% of the wealth of the american investor?

God Bless America

Posted by mona liza | Report as abusive
 

Hmm.. let me see.. If the stock market (and equivalent real-estate and credit market) went as high as 15,000 and is now only 9,500 I would say that was a rather large loss of WEALTH. When you value your assets at 15,000 you find you are quite wealthy, you can spend nearly twice as much, and banks were willing to lend to you based on these valuations. Of course, the flip side is that those levels of valuation were rediculously over-valued in the first place.

Posted by me | Report as abusive
 

I agree with Matt, the true value of a stock or share is sole based upon market demand. Same goes with the real estate market, there was no loss of wealth it simply shifted from one party to another, with the last party caught holding the bag. All Financial Industries were feeding off an inflated market demand, being full aware of the dire consequences but blinded by GREED.

Posted by Bryan | Report as abusive
 

jonathan et. al.
equity wealth absolutely can vaporize – & often does -daily.
say your stock closes @ $100 a share; & you go to sleep.

overnight, a terorist attack occurs & the stock market [& your shares] opens $33 lower – due to the ‘psychological’ impact.
all holders of that stock lost 1/3 their value.
who exactly do you think ‘made’ the $30 loss on the overnight price change??

Posted by lee c. | Report as abusive
 

I am going to proceed in favor of “wealth cannot be created or destroyed” Just because it provides a different perspective to the way we think of investments. Back to Physics, mechanical energy used to generate electrical energy is not a 100% efficient process; some gets lost as heat or to overcome friction.
Hence because wealth cannot be created or destroyed, during a transfer process, some value might get lost due to depreciation or write downs. The value that gets lost is still wealth but may be not useful. When an analyst says I will down-grade a stock, the wealth in the stock is still there, but the moment a transfer is initiated, what the buyer gets is completely lower. The lost value may be considered as payment. Now I have to think about this; payment of what and to whom?

Posted by Pelo | Report as abusive
 

Wealth can be destroyed. Prices going down is one way. having losses also. Real state values went down, so families lost wealth, relative to what they had at the peak. Their debts are almost the same. Net worth is negative. So some of these families are defaulting (reducing the value of their debts) thus transfering part of their losses to those who financed them, eg banks. Banks are losing, which impact their net worth, and their capacity to lend. At this point, assets and liabilities are being reduced in value (face value) This contraction in values does not reduce, nevertheless, the net worth of the whole economy. But the ratio between debts and net worth was effectively reduced, so the capacity of the economy to keep running at the same pace was negatively affected. So here comes the goverment and prints money, which means that is replacing the portion of the value lost in debt in the private sector by its own debt (issuing treasuries and bonds) Result? More debt in public sector, which is money flowing to buy assets, which will grow up in value, which in turn will be again useful as collateral for the private sector to indebt itself, and this flow will keep the economy running and leting the public sector to reduce its own debt. Meanwhile, people and companies continue adding value which is the real way to create wealth. America will recover from this crisis, at the end, this buble was just a price adjustment of irrational values both in assets and in debts (remember leverage of derivatives, wich are being destroyed also. but it depends on which side of the counter you are in order to suffer any kind of loss)
The only way for a nation to prosper is working and adding value, and this is why America is now much richer than 200 years ago. All this is just a hicup

 

Jonathan does not know much.

If a share closes at $4 on Monday and opens with a bid on Tuesday of $1, wealth has been destroyed, not transferred.

 

1. People were robbed when they bought stock at inflated prices; this is possible thanks to the “casino license” that allows the kind of speculation promoted by the wall atreet scammers. (All great scams have come out of wall street).

2, Real wealth was ROBBED. PRICES GO UP BECAUSE PEOPLE PAYED THE INFLATED PRICES. (Prices don’t just “fluctuate” without somebody gaining or losing, and in case you haven’t figured that out, you lose if you are the one “holding the bag” last.)

3. Prople were robbed again when the republicans and the media lords declared that a bailout “was necessary to save America and the world economy”

Posted by Another Schmuck | Report as abusive
 

Obama and the democrats went along with it because they did not want to preside over the debacle providing the republicans another golden opportunity to put the blame on the democrats, low interest rates(????)and “people borrowing what they cannot afford to pay”.
Low corporate taxes, tax cuts for the wealthy,and no wealth taxes are good for business and large investors because blah, blah, blah,..but low mortgage interest rates are not blah blah blah (what is good economics for the goose is not good economics for the gander ????)

Posted by Another Schmuck | Report as abusive
 

Neither the \”bubble\” nor the crash, were caused by the average borrower who for the most part are financial analphabets; it is ludicrous for the media to promote the notion that these financial analphabets fooled the bankers.

look at the size of the bailout for fannie mae and freddy mac, and the per capita cost for the bail out of 1 company, AIG….

look at the fact that some banks rejected the government money, and some had posted the biggest gains in their history…. DID THEY REALLY NEED A BAILOUT?

Posted by Another Schmuck | Report as abusive
 

‘Wealth’ needs to be defined with more economic rigor. ‘Value’ increases with more…. labor and scarcity. It seems that stocks, bonds, and other ‘paper’ securities, especially ‘debt values/wealth’ like US Treasury notes where you ‘buy’ someones ‘debt’, and it becomes ‘collateral’, and when accepted by a bank, ‘wealth’ is still a strange case. How can someone else’s ‘debt’ become an asset, except that the paper I.O.U. debt might allow you to seize ‘real’ hard assets if not paid or .. the interest paid. The ‘moving the wealth’ around theory needs a look from the perspective as to what is really ‘value’ and then what is ‘wealth’. I am not sure whether ‘appreciation’ in value is not more than ‘speculation’ that something has increase in ‘value’ and thus ‘wealth’ has increased.

Posted by Hans | Report as abusive
 

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