The excellent financial commentator Alistair Blair takes a look at the collapse of U.S investment bank Lehman Brothers in the Investors Chronicle. He notes that the $22bn balance sheet was overwhelmed by "so much toxic rubbish being generated in the mortgage financing".
The shareholder funds of $22bn had to support assets of $670bn.
www.searchifa.co.uk
Blair also noted that the Lehman average pay per employee was $330,000 and totalled $9bn a year.
Ages ago I read a couple of books on American investor Warren Buffett, who emphasised the importance of investing in things you understand. I suppose the financial situation of U.S investment banks is not that clear. Buffett has for the past few years described derivatives as "financial weapons of mass destruction". The investor from Omaha (Nebraska) has made money by investing in stocks such as Coca-Cola and reinvesting the dividends over long periods and really benefitted from compound interest.
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