Question regarding the movie "Wall Street"

It's not exactly like the movie, but on September 1, 2008 Lehman Brothers was selling for $16/share. Two weeks later on September 15, it was selling for $.15/share. So.....

So, another company killed Lehman Bros?

The film talked about KZI owning "toxic debt". What's the point in purchasing debt? Expecting a turn around?

quote:

---

It's not exactly like the movie

---

Right. Basically some firms highly leverage themselves even more than most banks (which is a lot), figuring it's safe to do so. Sometimes they are right. When they aren't things collapse really fast.

Plus They know Micheal Douglas only has a few shovels left before his dirt nap so they had to make the takeover/failure fast.

quote:

---

Are there any banks, or investment firms, that are liquid? I tend to think all of em would have problems putting up the cash on demand.

---

C'mon! Didn't you see It's a Wonderful Life? Jimmy Stewart explained all about a financial institution's liquidity in that movie.

Banks are funded on an ongoing basis with deposits and debt. Over time, due to the fundamentals of economics and the behavior of people, banks leverage up, and with more time those that rely to a large degree on short term credit get their asses handed to them when credit markets get spooked because they are neither able to fund nor refi maturing debts.

I've done audit work for some of the largest investment banks, worked with Yankee baffoons and have come to the conclusion that in their current states these things are hollow nothingness, but who knows, maybe THAT'S PRICED IN!