Collapse of the Lehman Brothers Essay

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“The Economy” is a common adage that once represented prosperity and our American Dream, but is starting to lose its meaning. In today’s day and age, this phrase is used to describe the financial instability of our nation and the world, and no longer implies that our nation is an economic powerhouse. Because of globalization, the economy of the United States is also negatively affected by the debt crisis raging within Europe. Although the banking, automotive, and housing markets of our country are steadily recovering from the so called ‘global recession,’ it is widely accepted that our economy is still extremely unstable, and not yet fully recovered. Many Americans wonder what the catalyst for this recession was, and which people and organizations should be held accountable. One specific organization heavily contributed to the recession, and while it was not the only one at fault, it was the catalyst for the recession as we know it today. This organization was an investment bank known as the Lehman Brothers, and when the company declared bankruptcy on Monday September 15th, 2008, the global financial markets began to collapse. How could the fourth largest U.S. investment bank collapse just a year and a half after reaching a record stock price of $86.10 per share? The Lehman Brothers was founded in 1850, and the company had to overcome many challenges in the financial market.These challenges included the railroad bankruptcies of the 1800’s, the Great Depression of the 1930’s, two world wars, a capital shortage when it was spun off by American Express in 1994, and the Long Term Capital Management collapse and Russian debt default 1998. Why then did the Lehman Brothers suddenly collapse within a year and a half? In researching this topic, I hope to prove why large scale institutional speculation and high risk investments are extremely unethical business practices, and

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