Business, Finance & Economics

International impact of Lehman Brothers

Workers in financial sectors in Europe today also found out they're out of jobs, but this worker said he was worried that many more people would be hurt. For example, Norway's pension funds, one of Europe's largest, said it lost $86 million dollars invested in Lehman and other big investors said they lost a lot too. European stock markets fell by more than 3%. This portfolio manager in Paris said it's too early to gauge the full impact on European banks from Lehman Brothers but the uncertainty itself is bad. To shore up markets and confidence, the European Central Bank pumped $45 billion dollars into the financial system today, and the Bank of England made a similar action. Analysts like this man says that government intervention was crucial. Some analysts are calling for nothing less than a total overhaul of investment banking. This analyst says the way top banks' brass are paid is a major problem, and he proposes linking their earnings to the risks they take and enforce more conservatism. He says investment banks should normally have $1 dollar in reserve for every ten they loan out, but in recent years that number has been stretched to one-thirty, making recovery nearly impossible.

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