It’s certainly been an interesting week in the financial industry, starting with the collapse of US investment bank, Lehman Brothers.
The bank went bust after over-exposure in the troubled US sub-prime mortgage market led to losses running into billions of dollars. How was this portrayed in the news, given the thousands of resulting job losses?
The Guardian published a series of photos of now-jobless Lehman staff leaving the Canary Wharf building, complete with some jarringly distasteful captions:
Compassion is for wimps. Live by the cult of equity, die by the cult of equity. Losers cry and hug each other. Winners snort a quick line of coke and kick their own grannies out of the way to get down to the recruitment companies that have taken up temporary residence in nearby cafes and start handing out CVs.
Nice. Police were in attendance at the bank’s offices to prevent further scuffles after an ex-employee took exception to having a microphone shoved in his face while being asked by a reporter how he felt about being unemployed.
Lloyds agreed a deal to takeover HBOS after fears of another bank failure led to a dive in share prices. The Metro said critics blamed the takeover on ‘spivs and speculators’ short-selling HBOS stock in order to make a profit, going on to add in astonished tones that short-selling is actually legal. Who knew? The Financial Services Authority (FSA) subsequently banned the increase or creation of short positions in publicly-quoted financial companies.
Despite its’ refusal to bail out Lehman, the US Federal Reserve stepped in with an $85bn rescue package to help AIG, the country’s biggest insurer, to stave off bankruptcy. US Treasury Secretary Henry Paulson said he supported the rescue because it would protect the interests of the US government and taxpayers. AIG’s trillion dollars of assets around the world meant the potential impact of a collapse was perceived as being more severe than that of Lehman brothers. Stock markets rallied as a result and the dollar rose against major currencies.
Morgan Stanley is also rumoured to be in takeover talks with a variety of institutions, including HSBC though Reuters mystifyingly quoted ‘a person familiar with the matter’ as saying they were not interested. Goldman Sachs has also been the subject of speculation following a drop in share price.
The BBC has leapt enthusiastically into the knowledge gap between the financial industry and the general public by publishing a helpful glossary for the layman of terms used in the credit crunch crisis, including the phrase ‘credit crunch’ itself. Covering a variety of banking terms, it also rushes to explain some other media-invented phrases like ‘staycation’ and ‘fakeaway’, words which we hope won’t find their way into the Oxford English Dictionary any time soon.
Meanwhile, people unfamiliar with the concept of reality have been flocking to the BBC’s Have Your Say website to comment on the global markets crisis with gems like this:
“UK economy could be solved if the governement bought Tesco. It can bring down food and fuel prices to there true costs. Give out food and clothing vouchers instead of weekly handouts of cash. Increase employment plus use the clubcard as the new national identity card.”[sic]