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Lehman Brothers “murdered”?

Ever wanted to know what causes a major investment bank to go belly-up?

On January 29, 2008, Lehman Brothers Holdings Inc. (“LBHI”) reported record revenues of nearly $60 billion and record earnings in excess of $4 billion for its fiscal year ending November 30, 2007. During January 2008, Lehman’s stock traded as high as $65.73 [...]

Illiquid incentives …

Bankers Win Big in Toxic Pay Plan – WSJ.com

Credit Suisse Group’s novel plan to pay bankers with a brew of its own toxic bonds and corporate loans has gotten off to an unexpectedly strong start, which could put further political pressure on other Wall Street firms to change how they pay their employees.

Late [...]

Which world are we in?

Richard Baldwin, Professor of International Economics at the University of Geneva, in Switzerland, has the following to say at Economist.com:

Crisis roundtable: Which world are we in? | Free exchange | Economist.com

It seems that banks and bank-like financial firms have two fundamental problems:

1) An investment problem.

They have investments that cannot be traded [...]