As the global economy worsened, the US dollar continued to depreciate, and the US stock market continued to fall. Although the daily decline was not big, only a few tenths of a percent, it could not stop the daily decline.
Almost all the companies in the financial sector were leading the decline. The US commercial banks and financial investment companies could not pull up their share prices.
Although the US government and the world's major banks were injecting capital, they could not save the market.
The more chaotic the market was, the more extreme the financial investment companies would be. They had lost too much, and if they did not use some extreme investment methods, they would not be able to make a comeback.
Instead of being doomed to fail, it was better to take a gamble. If they succeeded, not only would they be able to make a comeback, but they could also make a lot of profits.
In the current US financial market, most of the high leverage came from US financial companies. This was to attract more investment, so that they could make more profits and make up for their losses.
More and more junk bonds appeared in the market. Many bonds that were once worth as much as gold were now worthless. Bush was troubled by this.
In addition, the candidates were still attacking their party at this time, making their party's candidate look very embarrassed.
However, Bush did not have time to care about this. What he wanted most now was not to let the situation get worse before he stepped down. It would be best if the market completely collapsed after his successor came to power. In that case, he would not be responsible for it.
If this happened, he might be able to impeach the successor, which would be the best for his party. Anyway, even if the US financial market collapsed, other countries would not be able to surpass the US. After all, the US was the world's most mature and advanced financial market, and the US was the world's largest country.
Also, if the US financial market was hit, other financial markets would also be affected. Whether it was the European or Asian financial markets, they would all be affected. The financial markets, which were basically unaffected, were especially closed. The closed financial markets were not prosperous enough.
"Mr. President, I think we are in big trouble!" The Secretary of State came in to report.
"What happened?" Bush had been hearing a lot of bad news every day, and it made him anxious.
"Two more financial companies have applied for bankruptcy protection, and another one has declared bankruptcy!"
Sure enough, it was bad news again. He had heard too much similar news in the past six months. Can't there be some news that can make him happy?
"Is it big? Will it have a serious impact on other financial institutions? "
"The scale is not big, but it has a significant impact on the industry. Among them, Lehman Brothers suffered the most. They lost 2.8 billion USD in the first quarter, 4.1 billion USD in the second quarter, and more than 8 billion USD in the third quarter!"
"There are rumors that Goldman Sachs manipulated the stock price behind the scenes. The bankruptcy of Bear Stearns in the first quarter was also closely related to Goldman Sachs, but there is no concrete evidence."
"Barclays Bank originally planned to acquire Lehman Brothers, but after verification, Lehman Brothers' cash reserves are less than 100 million USD. This is inconceivable for a financial institution of this size. But now, Lehman Brothers' debt has exceeded 500 billion USD, and it is insolvent! "
Bush was shocked. The debt was not so serious two months ago. How did the debt reach more than 500 billion USD? This was the fourth largest investment bank in the United States. It used to be very famous.
If the losses were to double, would the debts also double? The government had given him a lot of emergency funds and loans. Wouldn't that be all for naught?
Bush knew very well what it meant to be insolvent. Any company that was insolvent would eventually go bankrupt.
Since Lehman Brothers was listed in 1994, this is the first time it suffered losses, and it never recovered. Last year's fourth quarter, the company was still making profits. Could it be that the company had serious financial problems and had been using financial tricks to cover it up?
But the company should not collapse the moment it started to suffer losses. How could this company's ability to withstand pressure be so bad?
But when Bush thought about Bear Stearns, which went bankrupt two months ago, he can understand.
Last year, Bear Stearns' market value was close to 20 billion USD. Two months ago, when Bear Stearns went bankrupt, it was only sold for 200 million USD. Its assets had shrunk by more than 95%, and its stock price had fallen below its IPO price.
Bear Stearns' bankruptcy was not only because they held a large number of collateralized debt obligations, but also because of the financial crisis. A large number of investors had concentrated on cashing in, and their cash reserves had dropped to 0!
If a financial institution had zero cash reserves, how could it continue to operate? That's why in March, the company's share price dropped from 60 USD to less than 3 USD in just a few days.
Feng Yu is involved in this, but Goldman Sachs is the scapegoat. Feng Yu's investments are leveraged by Goldman Sachs' financial companies.
The US government had provided Bear Stearns with an emergency loan of 30 billion USD. Even so, this company could not withstand the crisis and was acquired by JPMorgan Chase for more than 200 million USD.
It wasn't that the value of this company was only so little, but don't forget that this company was still burdened with huge debts. Many financial institutions that were interested in this company were scared away by this huge debt.
During this period, many financial institutions in the US had gone bankrupt, and Bush had thought about this. But he did not expect a giant like Lehman Brothers to go bankrupt!
"Contact Bank of America and other institutions immediately. Ask them to contact Lehman Brothers. Lehman Brothers cannot go bankrupt. This will worsen the financial market situation!" Bush said anxiously.
Since Barclays was interested in Lehman Brothers, it means Lehman Brothers still has a lot of valuable assets. Furthermore, Lehman Brothers has many investments from large investment companies. Why can't they help at this time?
"I have contacted them. Barclays has not completely given up on acquiring Lehman Brothers. With Bank of America's participation, they should be able to make a comeback, right?"
Bush was full of anticipation. That afternoon, the lawyer representing Lehman Brothers submitted documents related to bankruptcy protection.
Bush was stunned. Didn't they say there will be two big banks negotiating the acquisition? Didn't they also estimate the third quarter's financial performance? Why did they suddenly apply for bankruptcy protection?!
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