: Alejandro Reyes
: The Interest of Time A Great Balance Sheet Recession
: Coldmark Press
: 9780578427164
: 1
: CHF 14.10
:
: Sonstiges
: English
: 327
: DRM
: PC/MAC/eReader/Tablet
: ePUB

The Interest of Time is a book aboutyour Money.


As we approach the 10-year anniversary of the events that led to theGlobal
Financial Crisis, the economies around the world have yet to regain pre-crisis
growth levels. After unprecedented levels of stimulus, the US has embarked
on a process of normalization of interest rates. Will the central banks of
the world raise rates before the private sector has repaired their balance sheets?
Or will another recession put us on a collision course with 0% interest rates and
the Zero Lower Bound?


There are two ways to build wealth.Make more money. Orspend less. Traditional
economic theory relies on households and corporations who are always
trying to 'maximize profits' (make more money). However, once every 50-100
years, a special type of debt-driven recession damages balance sheets so drastically it changes people's thinking. They go into balance sheet repair mode. Theyspend less, instead of trying tomake more.


The Great Depression was aBalance Sheet Recession that lasted over 12
years and caused a global depression that fueled the start of World War II.
Japan's Lost Decade is aBalance Sheet Recession and has been raging for
almost 2 decades now.


And finally, theGlobal Financial Crisis, orThe Great Recession, is aBalance
Sheet Recession. And it is not over.


Everybody knows that there was a financial crisis that occurred in 2008. This
is the true story about how the 30 million families that found themselves in underwater balance sheets recovered from the greatest financial crisis sinceThe
Great Depression. Many more are still struggling under the weight of backbreaking
debt and stagnant wages in the US, and around the world.
This book is about theGreat Balance Sheet Recession, why it happened, how
the governments, households and corporations of the world can deal with it,
and steps you can take to strengthen your family's balance sheet for the future.

Chapter 1


Days of Thunder


On Monday September 15th, 2008, shortly after 1 am, Lehman Brothers filed for Chapter 11 Bankruptcy protection in a New York court. It was the largest bankruptcy in US history at the time, and it remains so to this day.

The 164-year old investment bank was out of business. The Wall Street titan’s demise began the chain reaction of events that led to the largest economic crisis since the Great Depression.

The original firm was founded in 1844 by Henry Lehman. It was originally namedH. Lehman. However, when his brothers Emanuel and Mayer joined the firm in 1850, it took on the Lehman Brothers moniker.

The firm would dominate theresidential mortgage backed security market until all the dominoes came crashing down that crisp September Monday morning.

Their leader, Dick Fuld Jr., had risen to the level of Chairman and CEO after 40 years of climbing the ranks. From fixed income trader, all the way up to the C-Suite. The Chairman and CEO had led the firm since 1994.

Lehman Brothers was the fourth largest Wall Street bank at the time of their bankruptcy filing, with a total of $639 billion in assets, and $619 billion in debt. The firm’s foray into theprivate label mortgage backed security market would eventually lead to their collapse. Lehman Brothers employed over 25,000 people around the world and had offices in every major financial center in the world.

The bankruptcy judge would approve the filing, simply stating that: “I have to approve this transaction because it is the only available transaction. Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets.”

The aftermath of what occurred in the following days and weeks would become the raw material for what I will callThe Great Balance Sheet Recession.

The story begins well beforeLehman Weekend, as it will forever be known. We can trace the beginning of the end for Lehman and all the top players in the space back to Bear Stearns.

In late 2007, Bear Stearns, the scrappy investment bank had risen to the number five largest Wall Street bank. They had over 15,000 employees specializing in Capital Markets, Investment Banking and Wealth Management.

The firm had been an institutional trading powerhouse, clearing trades for many of the top hedge funds on Wall Street at the time.

The Bear Stearns High Grade Credit Fund

Jimmy Cayne was a Wall Street boss. The Chairman and CEO of Bear Stearns had held the title since 2001, although he had been the CEO since 1993, one year before Dick Fuld took the reigns over at Lehman.

Cayne was born on Valentine’s Day in 1934, during the Great Depression.

He was known to hire people who were “poor, smart and had a deep desire to be rich.” The bank’s culture was a bit different from the other Wall Street banks who had their pick of top college talent. Bear Stearns had to find the diamonds in the rough, the undervalued future stars.

Ace Greenberg, the CEO before Cayne would comment: “If somebody with an MBA degree applies for a job, we will certainly not hold it against them, but we are really looking for people with PSD degrees.” Poor, Smart, and a Deep desire to be rich.

The culture at Bear Stearns was one of risk taking. It was encouraged from top down and embedded in the minds of the employees.

Mr. Cayne, or “Jimmy” as some of the desk bosses would call him, had a penchant for playing Bridge. He would routinely be playing at tournaments, and happened to be playing in one in Nashville, Tennessee at the time of the first spark that lit the fire for theGreat Balance Sheet Recession.

TheBear Stearns High-Grade Structured Credit Strategies Fund had been knee-deep investing in synthetic securities. Their 2006 fin