World on collision course for Lehmans 2.0?

clock

Four years after Lehman Brothers suffered the largest bankruptcy in US history, a former vice president at the investment bank has warned the financial system is on a ‘collision course' for another 2008-style event.

Lawrence McDonald is a former proprietary trader who ran a $1bn portfolio for the bank, and author of the book A Colossal Failure of Common Sense: The inside story of the collapse of Lehman Brothers. He expects Spain will be the next domino to fall on the world stage due to the excessive leverage in its economy and in the European banking sector, triggering a huge sell-off in financial markets.  Lehmans was leveraged up as much as 40 times before the crisis, and while European banks may not be at those levels, they are three times more leveraged than the US relative to GDP, McDonald s...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Investment

Partner Content: Is the interest rate descent the time to harvest bonds?

Partner Content: Is the interest rate descent the time to harvest bonds?

Markets expect interest rates to fall this year, offering investors the strongest opportunity for fixed income seen for a long time. Watch this video podcast to learn how best to harvest this exciting opportunity.

Sarka Halas
clock 28 March 2024 • 1 min read
Partner Insight: How effective are impact investments?

Partner Insight: How effective are impact investments?

Impact investing has transformed over the past decade, giving investors the opportunity to pursue both financial returns and social and environmental outcomes.

Sarka Halas
clock 27 March 2024 • 2 min read
Partner Insight: High-yield investors should keep a close eye on the default cycle

Partner Insight: High-yield investors should keep a close eye on the default cycle

As central banks start to think about cutting interest rates, forecasts for a peak in credit default rates are not far behind — and could happen sooner than expected, says Wellington Management’s Alex King.

Sarka Halas
clock 27 March 2024 • 2 min read
Trustpilot