Essay: Economic Issue for Lehman Brothers

Sample Essay

The economic issue that has been raised in the selected article by the author Liaquat Ahamed is the economic failure of the Lehman Brothers Investment Bank and related affiliations which caused the meltdown of the global financial and capital investment markets.

Lehman Brothers was one of the largest, oldest and one of the most popular banking establishments that had a prominent presence in the capital and investment markets. However in early 2008, the Lehman Brothers openly filed for bankruptcy due to failure of the business structure and the company. This caused a domino effect on the other banks present in the investment and capital market resulting in their failure and more filed bankruptcies. “At 9am, shares in HBOS, Britain’s biggest mortgage lender, crashed 34 per cent in early trading. By noon, panic had gripped the London Stock Exchange and the FTSE had shed almost 400 points. No one could believe it. Yet worse was to come: within three days HBOS would be taken over by Lloyds, and within three weeks the FTSE would fall below 4,000, wiping billions off the value of our leading companies. We had grown used to the idea that it always stayed around the 6,000 mark.” (Farndale, 2008)

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