TOO BIG TO FAIL

Why Was Lehman Brothers Allowed To Fail And Its Impact On Global Financial Market?

Declaration

Acknowldgement

I wish to express sincere gratitude to ______ for his valuable help on the paper. I accept alll errors as my responsibility.

Abstract

Too Big To Fail: Why was Lehman Brothers allowed to fail and its impact on global financial markets? Essentially, the financial system is of systemic importance to the economy. The stability of the system is therefore in the public interest. Consequently, the system is subject to regulation and supervision. Today, I intend to dwell on one particular issue, which is founded on a simple question: Why was Lehman Brothers allowed to fail?

I wish to start with this question because the collapse of this investment bank on Monday, 15 September 2008 was one of the factors which turned the period of turmoil in the financial markets that started in summer 2007 into a full-blown crisis. Following the failure of Lehman Brothers, panic set in that any bank, irrespective of its size, could go bankrupt. Market participants revised their investment decisions. The banks themselves started to fear that any of their counterparties could fail and stopped lending money to each other, causing the interbank market, which had already been under stress for months, to dry up. In the four weeks following the bankruptcy of Lehman Brothers, the European stock exchanges plunged by around 30%, more than the total fall recorded over the previous 12 months.

Chapter 1: Introduction

1. Introduction

It is not uncommon for an unhealthy tension to exist between the local church and marketplace people. Businesspeople suspect that the local church—particularly pastors—views them as little more than wallets for ever-growing church budgets or financial salvation for struggling ministry projects. They suspect—probably with cause—that few pastors understand the nuances of free market economy, competition, or entrepreneurial enterprise, and feel misunderstood, even offended, when easy-answer sermons fail to grasp fully or to grapple with the myriad of complex problems businesspeople face. They all too often feel guilt—or are at least inwardly torn—when work commitments keep them from regular attendance or participation in the services, meetings, and programs of the church.

Sometimes the preaching that businesspeople hear attempts to place the local church and its programs at the center of the marketplace person's universe. While few committed businesswomen and men minimize the significance of the local church in God's economy, or their own worth to the life of the church, their struggle concerns how to have integrity both with the local church and with their occupation.

For their part, pastors sometimes suspect that making money is the marketplace person's primary motivation, that businesspeople tithe an insufficient amount of time and energy to the local church, and that the workplace is too often devoid of overt or intentional spirituality. Sometimes churches and pastors fail to recognize the natural opportunities marketplace people have for incarnating the kingdom of God. While few churches or pastors would ever openly denigrate the significance of the marketplace in God's economy, their attitudes and actions occasionally communicate the ...