time to party like it's 1929

[erf_]

I didn't feel comfortable talking about this at work, due to the non-disclosure clause in my contract, but hell, this is very public news by now. Guess what day it is today?

Yes, that's right! It's BLACK MONDAY!

Five hundred points. The Dow dropped five hundred points. In one day. You aren't supposed to ever see numbers like that on the stock

Comments

[aesvir]

A comment on Lehman filing for bankruptcy, since we covered the basics in class today:

Sometimes, filing for bankruptcy is the right thing to do. Though you have to hand over all your estate (which is defined according to many complicated rules) to a trustee in bankruptcy, you've essentially frozen the status quo. Creditors can't use the local courts to get to your remaining assets, your landlord can't kick you out of your home unless he's already gone through eviction proceedings, etc. If your wages were garnished before (i.e. your employer was deducting money from your paycheck to pay your creditors directly), filing for bankruptcy stops that--your next paycheck is your "fresh start."

Now, I don't know what all that means for Lehman, since we don't do commercial bankruptcy until next week. But filing for Chapter 11 will buy Lehman some breathing space to work out a deal with its creditors that may not have to include liquidating everything. And it allows Lehman to go through with deals like today's sell of some units to Barclay's.

So, though bankruptcy is a scary thing and to be avoided, it's sometimes the best instrument available to people in a financial crisis. And the 2005 "reform" that made it harder to file for bankruptcy actually hurt more people, while helping credit card companies.