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This Article is prepared with the references of a research paper of HARVARD UNIVERSITY,
The first major financial crisis of the 21st century involves esoteric instruments, unaware regulators, and skittish investors. It also follows a well-trodden path laid down by centuries of financial folly. Is the “special” problem of sub-prime mortgages this time really different?
Our examination of the longer historical record, which is part of a larger effort on currency and debt crises, finds stunning qualitative and quantitative parallels across a number of standard financial crisis indicators. To name a few, the run-up in U.S. equity and housing prices that Graciela L. Kaminsky and Carmen M. Reinhart (1999) find to be the best leading indicators of crisis in countries experiencing large capital inflows closely tracks the average of the previous eighteen post World War II banking crises in industrial countries. So, too, does the inverted v-shape of real growth in the years prior to the crisis. Despite widespread concern about the effects on national debt of the early 2000s tax cuts, the run-up in U.S. public debt is actually somewhat below the average of other crisis episodes. In contrast, the pattern of United States current account deficits is markedly worse.
Report by Carmen M. Reinhart. University of Maryland and the NBER
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Kenneth S. Rogoff. Harvard University and the NBER
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Kenneth S. Rogoff. Harvard University and the NBER
Till now Sept 2008 , this Sub prime crises not solved. Only God knows how much losses is been made by these banks, they are also not declaring their complete losses in sub Prime till yet. Bailout plan by FED for Credit firm Freddie Mac and Fannie Mae and a $85 billion bailout package for Insurance Gaint AIG is not end of this story.. Merrill Lynch stakeholder is saved by Bank of America as BOA completly purchased Merrill Lynch in all cash deal of $50 billion. Lehman - this is the 4th largest credit firm of the world having assest of more than $639 billion and a borrowings of $620 billion is widly affected by this Sub Prime crise.. As Lehman Brothers story is on Dead End.. They have only two options left 1) to file a Bankruptcy or 2) sell the entire company to any business rival.. Of Course taking over LEHMAN is not a easy job, they need to face their business losses that the company is facing now a days... Now there is a news on Morgan Stanley and Goldman Sachs ,, market sources say that Morgan Stanley is also on big trouble.. As they have wide exposer on Sub Primes...
What Ever the report is, only retail trader or Investor who is flusing their money on this market.. On Nov 2007 Lehman was quoting around $67 / share now they are on big hit on Wednesday Leman was trading on range of 22 cents to 25 cents... So who burn their hand???... Only Retail Investor who thought they will not loose there money in safe stock like Lehman they loose... This simplyfies that Stock Market is not for retailers... They willl only loose their money.... and dunt buy stock on their name.. buy on their business according to market and with time...
Ideas by Abhishek on 18/09/2008 , Thursday 08.00 PM
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