How the fall of Lehman Bros could impact on the world. I know very little about these things but it all sounds very serious.
Most of the banks that you and I have a current or checking account with had dealings with Lehman and they have to figure out how much money they have lost in this collapse.
Share prices have slumped globally.
The credit crunch will intensify - ie prices likely to rise more.
And no doubt the price of petrol will go up again.
I'm by no means an economist though. :D
Almost all investments are global these days.
Among other things, Lehman Brothers (well-established, well-respected firm for over 150 years) held extensive sub-prime mortgage note packages, which in turn were invested in by many companies.
Most of these notes are now worthless--defaulted or value of property is less than the underlying mortgage--which makes the investments worthless. Some of the notes may turn around in time, but based on the current real estate market, that's going to take several years.
So, investors have lost money, which they have to make up somewhere else. If it's a bank or company, fees and/or prices will increase in time to compensate for the losses.
What's hurting even more--particularly in the US--is that retirement funds are heavily invested in these notes. That's already hurting many retirees--and will hurt even more as the dust settles a bit.
A bit over simplified, but the basics are there!
In what specific ways, Slowhand?