Tuesday, 16 September 2008

Beginning of the End

The City was not the same today. There was somber silence all around. Market forces had prevailed, the Fed had retreated and Lehman Brothers was laid to rest. Merrill Lynch, the largest US broker, agreed to forsake its independence in order to survive; albeit never again to be the same bull it used to be. AIG is on life support systems and Washington Mutual is fighting to live.

Two days and the world has changed. All the global financial innovation, the seemingly cavernous balance sheets and an opportunity of a life time to gain assets at deep discounts could not prevent this disaster. A look within and everyone saw their own domestic mess. It was too daunting a task to then take on an entity whose transactions cannot be understood or valued. Smug bankers who love to gloat about their deals and paychecks were left speechless and pay less. Some ironic justice on a rare bright, beautiful and sunny September morning in London.

While the US financial industry is licking its wounds, Europe should be ready for the coming onslaught and be prepared. It is not going to be fun ride from here on and there are a lot of hard lessons to be learnt. I only hope that unlike LTCM, Russian crisis and the dot com bust this tragedy is not short lived in the memory of the world. I hope it teaches bankers, corporates and the wider financial industry to control greed and the unnecessary aggression.

Canary Wharf is not the same tonight. There are no waiting cars outside the buildings that house the bulge bracket survivors. More floors are in darkness than usual and there is no one walking home late at night. The tube station is eerily quiet. It seems as if everyone and everything is pensive, except for the Reuters screen showcasing the tanking share market – a mocking reminder of what we have brought upon ourselves. Will we ever learn?

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