Lehman Brothers: A crisis of value

by Oonagh McDonald

On September 12th 2008, Lehman Brothers was valued at 639 billion US dollars. On Monday 15th September, it was worth nothing. How could trillions of dollars seemingly melt into air?

Lehman Brothers had a long and prestigious history, and certainly until the end of 2007 had appeared to be conducting a very successful business. Its collapse was the largest bankruptcy in American history and is widely regarded as a crucial event in triggering the turmoil in the markets that triggered the global financial crisis.

In this book, Oonagh McDonald, the author of Fannie Mae and Freddie Mac, unravels the events of that fateful September weekend. Using extensive documentary evidence and interviews with former Lehman employees, she reveals the decisions that led to Lehman's collapse, looks at why the government refused a bail-out and whether the implications of this refusal were fully understood. In clear and accessible language she demonstrates both the short and long term effects of Lehman's collapse.

This is a fascinating story, with very wide implications. In particular, it raises vital questions about virtual capital and artificial value. McDonald uses her study of the Lehman collapse to examine what is meant by economic value and how it should be identified and measured.

Genres: Business

288 pages, Hardcover

First published August 27, 2015

Reviews

[Phil Mackie · Rating 5 out of 5]

The blurb on the cover includes words of praise from four professors of financial disciplines. This may give a clue about the target audience. It is probably geared more to professionals in the field than the general reader. It can be difficult to keep up at times. Nonetheless, it is a thoroughly researched work going far beyond being yet another account of the collapse of Lehman Brothers. As the title tells us, the creation and destruction of value is the cnetral them,

[Sudhagar · Rating 2 out of 5]

There is not much new in this book that you can't find in the media or other books about the 2008 GFC. Not much actually is said about how Lehmann folded, the explanation is rather generic which exposes a lack of original research from primary sources. Also the author uses too much of technical jargons that most non-financial readers would not understand.

[Patrick · Rating 2 out of 5]

If someone is interested in the detail of the downfall of Lehman, this book will provide lots of information. I amnot. I only wanted to read about the big picture for a non-specialized. If that is your profile, this is not the book for you.