Lingering Impact of Lehman Brothers Bankruptcy
Lingering Impact of Lehman Brothers Bankruptcy
The Lehman brothers’ investment bank and financial services firm was founded in Alabama in 1850. As a private partnership agreement between two brothers after the civil war and two worlds wars, but faltered in September 2008 as a result of harsh economic climates. The esoteric precipitous disappearance of the firm due to the massive carnage of a disaster resulted to a financial crisis in America’s economy. This, created massive impacts resulting to an anomaly. Large firms that were perceived to have overcome previous levels of insidious market eradication that would have led to their insolvencies succumbed to it. The filed bankruptcy led to destabilization of both domestic and foreign economies (Ventura, 2008).
This lead to, a gloomy worldwide recession as result of hiked inflation levels in attempt to contain the silo of the failed financial regulatory system. This resulted into loss of huge billions of investment money hence the alleged crises. Being one of the most proficient financial organizations, alongside it, many globally hailed prospective business corporations ‘were unable to evade the same fate of this rather distorted sudden market crash. This impromptu turnover crippled the economy regardless of all the necessary efforts put in place to curb the huge shortcoming stature. A factor that distorted investors’ confidence in fear that they would undergo a rather mired scenario. One which a much worse recap of the same incidence would incur to huge devastating losses of their invested capital (Ratner, Stein & Weitmauer, 2010). This rather horrifying sentiment revoked the free will of potential investors to buy shares from different companies hence stagnating the rapid growth of business innovations.
In admirable attempt to resuscitate functionality, such businesses opt to rather sell their shares to the government rather than see their numerous imposed efforts diminish .With no hopes of continuity, salvation and strategic reforms to get financial aid most decide to let go .Such panic embeds insecurity amidst business proprietors, afraid that their funds would be embezzled by the business managers in maneuvering schemes to obtain money from the earned business returns. Reluctance in trusting them with the relevant managerial information to avoid ideological inconveniences amongst their few unresolved competent capabilities (Khan & Jain, 2007).To ensure that organizational secrets are kept hidden, this measure however stern and applicable it may be may result to lack of proper prudential intermediations by the managers in improving profit count.
In the events of this absolute mayhem, major business enterprises suffered adversely. A notable incident that, tried to escape catastrophe was the AIG. A re-known insurance company that hobbled due to the sudden recess, but still fathomed huge devastating losses. The Company continues to try to accentuate their stability and has father sought the aid through, proper litigation of the U.S. taxpayer. An assistance that acts as leverage. As a result, different managers have opted different ways to handle situations that are perceived in being viable to creating relevant recounts. Most, believe in reassessment of their enacted profundity protocols to handle drawbacks due to poor management policies (Ratner, Stein & Weitmauer, 2010).
Hence, aggressive levels of scrutiny systems have been put in place to ensure that complete success is without hindrance achieved. Total discretion of confidentiality amongst the owners and its employees are norms practiced.This practice seeks to ensure that the root crisis of each financial cause is highly regarded and the relevant action imposed to curb the problem is handled with transparency and according to the proper market complacency. With regard to the ethical requirements of the judicial boundaries an exercise deemed to improve the guard against future disasters in relation to the pre-historic bankruptcy scandal. Thus just like in, the filled bankruptcy, the affiliates that had been rendered bankrupt, sort to remarkably decipher the causes behind their mishaps. Gaps that might have led to the creation of the huge massacre that arose from its effects leading to delinquency of the associated firms.
The state of crucially caused other managers to find the situation unbearable and decided to resign. Others found it best to persuade the proprietors that the only resource at their advantage was to give up their ownership by selling their firms to prospective investors or the government. Regardless of the usual norms and portfolios of sticking to their cause in handling situations that lead to the quick demise of their firms in the verge of financial crisis. In accordance to such citation of events managers were able to reminiscent much retrospective concepts that would help them monitor and visualize the most appropriate methods. To avoid exacerbating such situations high levels of conventional attention for proficient resourceful methods to curb a repetition of such scenarios were imposed. Managers also needed to be aware of financial fraud activities that disrupt the businesses economy leading to misappropriation of funds that may have rather served different purposes (Ventura, 2008).
It should also be noted that regulatory financial reforms can end up triggering major loop holes for a financial crisis. They therefore should be reviewed precisely well and with total specialty given they are major game players in determining the financial crisis of a given economy .Slight mistakes could lead to huge problems taking to caution the Lehman brothers scandal. Given the recess of what had happened before, necessary regimes have been put in place to ensure that, an eventual occurrence becomes an aspect of controversy. Since the initial incidence resulted to a major hindrance into the country’s economic growth and stabilization. This therefore implies that there are minimal chances that an event of such magnitude could occur again due to the appellation of new financial regulatory reforms.
The probability of such an incident to occur are rather slim than, they going unrecognized without proper revisal. Due action can be taken and implemented before they result into similar massacres. Speculation therefore deems it fair to support the fact that imposition of regulations after the crisis should be able to withstand any flexible turn of events .Events that may have before created a viable threat to the economy. Sequel to the weak American economy due to the much oblivious mistake, they have been several regimes put in place to oversee the eventual success of the current economy. Unlike then, there has been implementation of a body that operates as a conservator and preserve of the value of a failing bank. It restores its financial health and acts as a receiver to liquidate a failed bank. A policy designed to ensure banks are not subject to the lengthy proceedings in court.
In a similar spirit measures have been put in place to ensure that when a bankruptcy case is filed, the debtors and creditors do not take any rational actions against the bankrupt company or firm. This has inversely reduced the depression on the economy of America thus reciprocating to a healthy financial diligence of proper income flow without the thought of having to lose their stability. America stands to currently be a stable country given it is able to fend for all its subjects by ensuring that even the aged are able to secure funds to finance their needs. The beneficial groups set up eradicate poverty and enable it suit and fit its first class title in the world. The country also lends national aid to western economies a move that tends to depict that it has more than enough and is able to support different countries through grants and freewill assistance (Ratner, Stein & Weitmauer, 2010).
It practically remains evident that though the bankruptcy scandal affected America’s economy they were able to initiate necessary measures to better its economy and the distraught needy national economies. Since high levels of inflation were recorded as a setting of the offset trouble that relatively spread. This leads to destabilization of the financial economies different national economies. For this reason many individuals’ tend to be reluctant in investing huge financial money in viable and prospective business enterprises. The emergence of the eventful discord also resulted to reduced demand of commodities in different sectors within the business climate .As a result there has been depreciation of money in circulation thus high margins of losses were realized. Relative reduction in demand of commodities implies a reduction of production and consumption thus leading to losses of jobs amongst the employed lot of civil servants hence the emerging rise of poverty within a country and increased mortality rate of its citizens, which clearly is an aspect of poor financial economic stability (Correia, Flynn, Uliana, Wormald, & Dillon, 2015).
Citing the necessary relevant precautions, future investment decisions should rely basically in the terms of been able to fluctuate (Khan & Jain, 2007). Hence coincide with the flexible market behavior due to the bewildering changes of consumer decisions to satisfy their wants.Strategies should be invoked to see how best obscure schemes can be properly managed without the emergence of any risks involve. This ensures proper risk management and allocation of the compatible steps to be followed inhandling such instances. In return one is able to garner logical profit margins, this means that breaches that may lead to bankruptcy are contained and success achieved.
The overview results of the filed bankruptcy point at the ideal fact that although the unavoidable necessary prompts can be imposed to prevent similar collateral episodes of damage. Thus different organizations and firms could work hand in hand to eradicate any points of weakness that were noted during the initial financial regulatory reforms. Nonetheless due to the significant improved of the economic stability there has been a relative increase in the observations mad e in accordance to the relevant norms of handling financial crisis .Furthermore the bankruptcy led to an eye opener. Since credit crisis monetary institutions have made an effort to analyze the revised financial regulatory reforms with complete observations .Business investors on the other hand have embarked in investing their capital on the rather competitive market. This comes immediately after an admirable number of organizations taking into the market.
In addition, in attempt to prevent emergence of another bankruptcy scenario business owners have decided work hand in hand. This is made possible through ensuring that they work as per the stipulated ethical decorum’s .Since increased market competitions have led to the realization of huge profit margins .An implication that is deemed as a result of uniform morphing of the economy .This aspect has hence resulted to the increased money in circulation as more money is plunged into business enterprises. The stern implementations have been able to meet the rather unconventional market environment. Managers have across time realized that their strategies should be flexible at all times. This enables them to fluctuate in relation to the bewildering change in tastes and preferences of consumers. Hence lead to proper auditing of their portfolios’ to create adequate methods of curbing imbalances whenever they occur. Thus the radical rational impromptu efforts are not incurred.
Correia, C., Flynn, D., Uliana, E., Wormald, M., & Dillon, J. (2015). Financial management. Lansdowne: Juta.
Khan, M. Y., & Jain, P. K. (2007). Financial management. New Delhi: Tata McGraw-Hill.
Ratner, I., Stein, G., & Weitmauer, J. (2010). Business valuation and bankruptcy. Hoboken, NJ: Wiley.
Ventura, J. (2008). The bankruptcy handbook: everything you need to know to avoid bankruptcy, get rid of debt, and rebuild your credit. New York: Kaplan Pub.
Warren, W. D., Bussel, D. J., Skeel, D. A., & Jordan, R. L. (2012). Bankruptcy. New York, NY: Foundation Press Thomson/West.
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