Max Keiser Blog: Lehman got whacked

April 17th, 2009 by maxkeiser

Headline:  Yellen signals letting Lehman collapse was a mistake

American entrepreneuralism, as exemplified by innovators like Thomas Edison and Henry Ford, could not have been possible without an equally innovative, creative, engineering marvel known as America’s capital system HQ’d on the corner of Broad St. and Nassau St; home of the NYSE.

Over the decades the home of fast growing capital migrated to the multi dealer network known as NASDAQ.  Microsoft (MSFT), Apple (AAPL), Google (GOOG), raised billions fast on NASDAQ from investors all over the country and all over the world who got calls from stock brokers anxious to get shares of ‘the next big thing’ into their accounts fast, before prices doubled, or tripled and in some cases rose 1,000 or even 2,000 percent.

Starting in the 1970′s, and taking off with the bull market of the 1980′s, the home of the fast talking, street smart Wall Street broker was Lehman Brothers. Shoe shine boys became million dollar producers at Lehman. Initial Public Offerings (IPO’s) rolled out of their investment banking division in a marvelous parade of ideas brought to life with the plasma of a public offering. But Lehman is gone. Taken out back by its competitors and shot in the head when they willfully opened the trap door of credit denial.

Lehman got whacked.  Some speculate that it was Goldman Sachs who ordered the hit as a way to get some loans off their balance sheet they didn’t feel like paying back. I have no reason to believe this was not the case. Some may say, well, business is tough, ‘survival of the fittest,’ and if you can’t compete you deserve to go the way of the dodo.  In Lehman’s case we lost something special. Lehman was the goose laying the golden eggs that drove the NASDAQ to 5,000. Now it’s gone and the regulators are only beginning to figure out that it was a contract killing by the company’s enemies.  But it’s too late now, the turf war is over and the zombie, wealth-eating banks won.

The next wealth machine on the scale of Lehman, where any ‘Joe the Plumber’ could walk in off the street and make a million bucks, will probably pop up in Asia somewhere.  Lehman Bros. RIP

Tags:   · · 14 Comments

14 responses so far ↓

  • snoop diddy
    Apr 17, 2009 at 6:05 am

    I wonder if it will have anything to do with full reserve or sharia compliant banking? Talk of developing an Islamic style of short selling in Malaysia.

    http://www.reuters.com/article/IslamicBankingandFinance09/idUSTRE53F37N20090416

  • Lazlo
    Apr 17, 2009 at 7:15 am

    Max is the Hunter S. Thompson of financial journalism.

  • Richard Buchanan
    Apr 17, 2009 at 8:27 am

    @maxkeiser Is pre-buying the 1930′s equivalent of an IPO? Except in this instance the share certificate is actually the product and not the profit?

    IPO – INTERNET PIRACY OPENSOURCED!

  • kass
    Apr 17, 2009 at 9:12 am

    “Max is the Hunter S. Thompson of financial journalism.”

    …. Exactly!

    In addition, speaking of Lazlo:  Coincidentally, I watched Casablanca couple nights ago and Bogart kept reminding me of someone. Have watched it many times and Bogie’s always just been Bogie.  Finally realized he made me think of Max! The direct, honest, pull-no-punches style. What an eye opener.

  • Rich
    Apr 17, 2009 at 9:38 am

    @Lazlo:

    Max = Hunter – acid – alcholism – insanity – guns

    Max = brutal honesty + witty insight + brains

    Max = Hunter (the other shit doesn’t matter)

  • Mr Supergeek
    Apr 17, 2009 at 10:44 am

    @Rich
    Max=Hunter-Alcoholism-Acid -Insanity

    You write about HST like this was a bad thing….

    Careful about your assumptions of Max,  anyone who drinks triple whiskeys/talks philosophically about financial markets in terms of sperm and eggs/rocks backward and forward while being interviewed, with a dead eyed look that would scare most sharks, could be guilty on all counts.  
    Which by the way wouldn’t diminsh any of the affection or respect I have for the man.

  • Dan
    Apr 17, 2009 at 11:39 am

    “When the going gets weird, the weird turn pro” — HST

    —–

    Also check out Janet Yellen’s speech, posted at FRBSF’s site, commenting on her revisiting Hyman Minsky’s work: Link

  • Susan
    Apr 17, 2009 at 7:56 pm

    I don’t know much about Lehman Brothers, but like many people here in Florida, we thought it quite bizarre that Florida’s former governor Jeb Bush was hired as a consultant to Lehman right before Lehman collapsed. See google:

    at-Largely: What is Jeb Bush’s role in the Lehman Brothers meltdown?
    Lehman Brothers was founded in 1850. The firm managed to get through the Civil War, WWI, and WWII, the Great Depression, and the attacks of …
    http://www.atlargely.com/2008/09/what-is-jeb-bus.html – 69k – Cached – Similar pages

    ProgressiveDem: Jeb Bush, a Lehman Brothers Consultant and Florida …
    Sep 16, 2008 … Here’s more information: “Lehman Brothers and Jeb Bush, now that’s a pair; Jeb a “consultant” for Lehman Brothers. …
    blog.progressivedem.com/2008/09/16/jeb-bush-a-lehman-brothers-consultant-and-florida-state-funds.aspx – 56k – Cached – Similar pages

    Jeb Bush: Lehman’s Secret Weapon – Deal Journal – WSJ
    Aug 27, 2007 … Jeb Bush. According to a small handful of reports Friday, including this one in Investment … Lehman Brothers‘ Dick Fuld Has a New Gig …
    blogs.wsj.com/deals/2007/08/27/jeb-bush-lehmans-secret-weapon/ – 67k – Cached – Similar pages

    Lehman hires Jeb Bush as private equity advisor | Funds | News …
    Aug 30, 2007 … NEW YORK, Aug 30 (Reuters) – Lehman Brothers has hired Jeb Bush, brother of the President of the United States, as an advisor to its private …
    http://www.reuters.com/article/fundsFundsNews/idUSN3046902620070830 – 52k – Cached – Similar pages

  • richard
    Apr 18, 2009 at 9:22 am

    Didn’t read any of the links. But Gov.C.Crist fired the adminstrator and temporarily suspended the fund, back in the spring of 2008,  that held ( holds? ) all the collected tax money on deposit from the various county & city comptrollers when it was found out that a huge amount of the proceeds were invested through a Lehman Bros. broker in sub-prime derivatives.  The state took quite a loss and adminstrators were steadily removing their funds from the state administered fund when the suspension was announced. I believe the losses were reimbursed from the state’s emergency fund.  

  • Susan
    Apr 18, 2009 at 11:02 am

    More here:

    http://www.tampabay.com/news/politics/state/article546812.ece

    And see:

    http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×3368260

    – which appears to be an excerpt of first link:

    At the center of the controversy are three Wall Street giants that offer brokerage services to the SBA: JPMorgan Chase, Credit Suisse and Lehman Brothers.
    Between December 2006 and December 2007, records show, a bulk of the now-suspect investments — 42 percent — was sold to several SBA funds by Lehman Brothers.

    Lehman Brothers hired former Gov. Jeb Bush as a consultant in June 2007 — five months after he left office and the SBA board of trustees. In July and August, Lehman sold many of the securities that were soon downgraded.

    Earlier this week, Bush repeated earlier statements that he played no role in the Lehman Brothers sales.
    “I was not involved in these investments by the State Board of Administration,” Bush said in an e-mail. “The decisions were made by the SBA when I was no longer governor. In my role as a consultant to Lehman Brothers, I have absolutely nothing to do with any sales or trading related to the State Board of Administration.
    “Markets across the globe have been affected by subprime mortgage issues. The Florida Cabinet and State Board of Administration are doing the right thing by working to protect the remaining local government investment pool participants.”

    Stipanovich, the former executive director, was appointed by Bush and the other two trustees in 2002. He did not return three calls for comment. Stipanovich is the brother of J.M. “Mac” Stipanovich, a prominent GOP lobbyist who advised Bush’s 1994 gubernatorial campaign.

    …..

  • Susan
    Apr 18, 2009 at 11:04 am

    And here:

    http://www.tampabay.com/news/business/article805295.ece

    Shaky Lehman Brothers has deep ties to Florida

    Sydney P. Freedberg, Times Staff Writer
    In Print: Thursday, September 11, 2008

    Gov. Charlie Crist and Chief Financial Officer Alex Sink, who serve on the SBA’s three-member board of trustees, have said they suspect Lehman dumped tainted securities on the state.

  • emazur
    Apr 18, 2009 at 10:05 pm

    “Some speculate that it was Goldman Sachs who ordered the hit as a way to get some loans off their balance sheet they didn’t feel like paying back. I have no reason to believe this was not the case.”

    I’ve heard Max say this before on tv – I’m not necessarily disagreeing with him but I haven’t been able to find any evidence of this in my searches.  He should make another article stating his case.

    We should have let all the banks fail to flush out the system and send a clear message – if you gamble and lose, the casino will not be bailed out.  JP Morgan chief executive Jamie Dimon denies that the collapse of Lehman Brothers played the central a role in the crisis that it has been assigned:
    http://www.businessinsider.com/jamie-dimon-lehmans-collapse-was-not-as-important-as-you-think-2009-4
    And even AIG’s ex-CEO said bankruptcy for AIG would have been the best choice:
    http://digg.com/d1nucy

  • Mother Earth
    Apr 19, 2009 at 12:07 am

    Have you seen this http://www.youtube.com/watch?v=xUKSU1qahgE ? It seems Lehman was first hanged and then pulled by the legs by the credit deniers..