The Fall of Lehman Brothers

On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies.

The filing marked the largest bankruptcy in U.S. history.

The following day, the British bank Barclays announced its agreement to purchase, subject to regulatory approval, Lehman’s North American investment-banking and trading divisions along with its New York headquarters building.

On September 20, 2008, a revised version of that agreement was approved by Judge James Peck.

Watch the full documentary now (playlist – 59 minutes)

America’s Bankrupt Banks (Inside the Meltdown)

On Thursday, Sept. 18, 2008, the astonished leadership of the U.S. Congress was told in a private session by the chairman of the Federal Reserve that the American economy was in grave danger of a complete meltdown within a matter of days. There was literally a pause in that room where the oxygen left, says Sen. Christopher Dodd (D-Conn.)

As the housing bubble burst and trillions of dollars’ worth of toxic mortgages began to go bad in 2007, fear spread through the massive firms that form the heart of Wall Street. By the spring of 2008, burdened by billions of dollars of bad mortgages, the investment bank Bear Stearns was the subject of rumors that it would soon fail.

Rumors are such that they can just plain put you out of business, Bear Stearns’ former CEO Alan Ace Greenberg tells FRONTLINE.

The company’s stock had dropped from $171 to $57 a share, and it was hours from declaring bankruptcy. Federal Reserve Chairman Ben Bernanke acted. It was clear that this had to be contained. There was no doubt in his mind, says Bernanke’s colleague, economist Mark Gertler.

Bernanke, a former economics professor from Princeton, specialized in studying the Great Depression. He more than anybody else appreciated what would happen if it got out of control, Gertler explains.

To stabilize the markets, Bernanke engineered a shotgun marriage between Bear Sterns and the commercial bank JPMorgan, with a promise that the federal government would use $30 billion to cover Bear Stearns’ questionable assets tied to toxic mortgages. It was an unprecedented effort to stop the contagion of fear that seemed to be threatening the rest of Wall Street.

While publicly supportive of the deal, Treasury Secretary Henry Paulson, a former Wall Street executive with Goldman Sachs, was uncomfortable with government interference in the markets. That summer, he issued a warning to his former colleagues not to expect future government bailouts, saying he was concerned about a legal concept known as moral hazard.

Watch the full documentary now (playlist – 52 minutes)

Living in the End Times According to Slavoj Zizek

Slovenian philosopher Slavoj Zizek, akaThe Elvis of cultural theory, is given the floor to show of his polemic style and whirlwind-like performance. The Giant of Ljubljana is bombarded with clips of popular media images and quotes by modern-day thinkers revolving around four major issues: the economical crisis, environment, Afghanistan and the end of democracy. Zizek grabs the opportunity to ruthlessly criticize modern capitalism and to give his view on our common future.

California Dreaming

California is a strong brand, the state of new beginnings, dreams and movie stars, of surfers and a wonderful climate.

But the Golden State is bankrupt and the city of Los Angeles is running out of cash. Public services are being cut and unemployment keeps rising. At the same time, optimism, entrepreneurship and the belief in the power of America are stronger than ever.

In Los Angeles, we meet five people who are going through a transformation in their lives during this crisis. Justin and Christine lost their jobs and are now living in a van with their two young sons.

Charles has gotten out of prison after fourteen years. Mizuko prepares her children for the future by making them at ease in virtual reality.

Laura has taken advantage of the crisis by buying land cheaply and starting an urban farm and artists collective Fallen Fruit maps the abundant free ‘public fruit’ available in the city.

Who are the pioneers who are reinventing the new America and how do they see the future?

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Robert Shiller on How Human Psychology Drives the Economy

Professor Robert Shiller, will present the annual Irene and Bernard L. Schwartz lecture titled Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism, focusing on the current economic crisis and its causes and consequences. The lecture will be based on Professor Shillers upcoming book of the same title, which is co-authored with George Akerlof, Koshland Professor of Economics at University of California, Berkeley and Nobel Laureate. A panel discussion and question and answer session, will follow the lecture with Professor Brad DeLong, professor of Economics, University of California Berkeley, Teresa Ghilarducci, Irene and Bernard L. Schwartz Professor of Economic Policy Analysis, The New School for Social Research; Director, SCEPA and Jeff Madrick, seniors fellow, SCEPA, The New School for Social Research. 

Robert J. Shiller is the Arthur M. Okun Professor of Economics, and Cowles Foundation for Research in Economics at Yale University. He is also professor of Finance and Fellow at the International Center for Finance at Yale School of Management. He has written about financial markets, financial innovation, behavioral economics, macroeconomics, real estate, and statistical methods, as well as on public attitudes, opinions, and moral judgments regarding markets.

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Fear the Boom and Bust!

An awesome video: Hayek vs. Keynes Rap Anthem!