Holy fucking mackerel! Sorry for the swearing, but on this occasion words actually fail me. Read this story from the New York Observer about the collapse of Lehman's. (Emphasis mine.)
There are two ways to react to the biblically proportioned report that Lehman Brothers’ bankruptcy examiner released last Friday, which over its 2,209 pages (not counting appendices) has echoes of Grisham, Orwell and Ayn Rand.
The first is to lose faith in man. As it reveals, Lehman turns out to have used a secretive and dazzling accounting trick to fluff up appearances as it tumbled toward a violent end in September 2008. That month’s gruesomeness still reverberates: Moody’s not only warned this week that it may downgrade the American government’s triple-A credit rating, but it said that maintaining it will require “adjustments of a magnitude that, in some cases, will test social cohesion.”
The second reaction is to shrug.
Two former senior Lehman executives did just that this week, telling The Observer that the examiner’s autopsy, especially its news that about $50 billion was quietly scooted off the firm’s balance sheet for each of the first two quarters of 2008, was simply not a big deal. “If Valukas went into Goldman Sachs, what do you think the report would look like?” the first asked, referring to the court-appointed examiner, Chicago attorney Anton Valukas. “This would be a fairy tale compared to that.”
“It’s just not that big of an event. But that’s not what people want it to be, so they’ll make it not that way if they can,” said the other. “They just want to be mad and don’t know what they’re talking about and want to be outraged.” After an interview, that executive sent a follow-up email comparing the widespread furor over Lehman Brothers to the groupthink that sent America into Iraq after Sept. 11.
The idea, a year and a half after the biggest bankruptcy in American history began, is that criticism of the firm is the domain of unsophisticates. “When I read this, I giggle a little bit. Because $50 billion is a shitload of money, but in the grand scheme of things,” said a third source, a former managing director in England—where the accounting gimmick, named Repo 105, was given a legal endorsement that it couldn’t get here, “$50 billion is a drop in the ocean.”
I think that I need to go and lie down in the basement, because when jamming the whole of America into the shitter and the rest of the world with it is okay, because you are sophisticated, then we are totally fucked.
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