The Great Recession

Hello friends 👋,

So here we are with a new chapter of our work-life "Recession" the global economic downturn that devastated the world financial markets as well as real state industries and all banking sector. 

It generally considered to be the longest period of economic decline. It's a great depression 😭for all and it's effect were definitely global in nature. The great recession was most pronounced in US.

15 September 2008, It was the unforgettable day in the worldwide history, this was moment when global financial stress turned into a full blown international 😱 emergency. 

It was all about an US bank " Lehman brothers" which caused recession. 

• Lehman Brothers had humble beginnings as a dry-goods store, but eventually branched off into commodities trading and brokerage services.
• The firm survived many challenges but was eventually brought down by the collapse of the subprime mortgage market.
• Lehman first got into mortgage-backed securities and CDOs in the early 2000s before acquiring five mortgage lenders.
• The firm posted multiple, consecutive losses and its share price dropped.
• Lehman filed for bankruptcy on Sept. 15, 2008, with $639 billion in assets and $619 billion dollars.
• The crisis led to increase in home 😑 mortgage foreclosure worldwide and caused millions of people to lose their jobs , life savings and their homes.

Before 12years ago the stunning implosion of Investment bank Lehman brothers 15 September 2008, there were no doubt to considered it as small fire in the mortgage sector.

Well Lehman filled for next step  bankruptcy after last affort to sell.

Generally banks and financial sectors did not always operate on high leverage. 

Early in 12th century it was still typical for banks to have equity equal to 25% of their assets, but banks equity levels declined to single digits, around 6-8% of their total assets in the US.

Bankers on US had developed a lucrative business of buying up the us mortgage of poor Americans, packaging them together with better quality mortgage and selling them on as essential risk free assets known as mortgage backed security.

It was the 4th largest investment bank in US.

Lehman had acquire 5 mortgage lenders including BNC and subprime lenders.

Lehman invested even more securitized mortgages over next few years.  It's big investment in mortgages made it especially

 vulnerable as the housing market started to crashe. Lehman brothers started to correct course but it was too late, it didn't have the capital cushion to absorb it's losses and it's stock price continue to plunge. 

Lehman was forced to fire for bankurpatcy on 15th September, 2008.

The firm held more then 600 billion in assets and it remains the largest bankurpatcy in us history.

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