By now, this should be old news. After all, people trade on the seconds but the fate of many lies uncertain.
The news came in midnight U.S. time. I surfed-read Bloomberg last night before I slept and it was pretty much stale news at that point (which was evening in the U.S). Imagine the shock when I clicked onto Bloomberg in the morning and realised that the veritable financial institution is now history.
Frantic. Dramatic. Shock.An understatement considering this is the biggest corporate bankruptcy ever. Bear Stearns, Enron and Andersen are now a distant memory. For all that have happened over the last 18 months due to the on-going credit and liquidity crisis, the events over the weekend and last week were of no match. First Freddie Mac and Fannie Mae were rescued by the U.S. government which led to the biggest ever default in the credit derivatives market. Oil plunged below $100, a good $30+ from March, then Lehman was reportedly due to be bailed out by some white knights, which only translated to a wipe-out come 48 hours later.
Goldmans Sach. Morgan Stanley. JP Morgan.Lehman Brothers. Merrill Lynch. Bear Stearns.The last three have disappeared in a space of less than six months. The fallout could be less dramatic if not for the fact that I am in this very threatened industry. I remember I was only two months away from joining Andersen when the beleaguered audit firm collapsed which left me wondering where to go. Enron, Worldcom and the preceding Afghan war a year ago spelled doom for the many new graduates in my batch. Yet God has it for me to join KPMG which subsequently led me to where I am now.
The Lehman New York office has since become a
"new tourist attraction". With staff streaming out of the office on Sunday night and curious bystanders standing by, watching the unfolding of a financial soap opera. How sad must it be for these staff, most of whom have nothing to do with the crisis (traders and senior management should be held responsible), many of whom may have kids and wives, many of whom will find difficulties in securing jobs in the next few months or years. It did not stop at New York; Lehman London HQ is just opposite the Barclays Capital building where I work. And by late morning, the reporters were all on-site to capture the first of many to leave the building. Cabs were streaming in and out to ferry tired and wounded bodies. Cameras and videos captured the dejected faces.
"It's kind of chaotic. The only question remaining is whether we will get this month's pay check."
"The Fed didn't bail us out. That's the right decision. As a taxpayer, rather than a Lehman employee, you shouldn't have to foot the bill for someone else's decision. It's a sad story for me and very many others."
"I had trouble getting here because of the Eurostar fire. When I finally made it I found out I was fired. We are all fired."
Quotes from many despondent staff. I know of a commodity trader in Lehman. Xueyan's ex-boss is there now. The talk at the water-cooler today, of course, revolved around Lehman. My colleague, who joined us a year ago from Lehman, told me his old team is no longer there. Everyone basically packed and went. And most of these bright people, he said, are unlikely to get jobs soon; many of whom are in their late thirties and hold senior/middle-management titles.
Will there be a change in the investment banking models? As we looked at the strike-list, there is something common among the fallen - the lack of a retail business. Not many MONTHS ago, retail banking was seen as unsexy and non-glamorous but it is now this unattractive business which is holding up the likes of UBS, Citigroup, Credit Suisse - banks which have posted similar or bigger losses than the collapsed. Right now Goldman and Morgan Stanley
have come under fire (Is it a good thing that JP Morgan has the Chase business to fall back on?).
Perhaps this is what we call the cycle - you always have a trough and peak. And it is our time to witness this tough period. The day will come when the panic will strike me worse. Instead of seeking security in the securities that have now gone worthless, I thank God for His provisions. And if I were to worry about tomorrow, He has assured me - for He holds my future.
"Consider how the lilies grow. They do not labor or spin. Yet I tell you, not even Solomon in all his splendor was dressed like one of these. If that is how God clothes the grass of the field, which is here today, and tomorrow is thrown into the fire, how much more will he clothe you, O you of little faith! And do not set your heart on what you will eat or drink; do not worry about it.
