Long Term Capital Management LTCM : The Roots of Lehman’s Fall?

Long Term Capital Management LTCM : The Roots of Lehman’s Fall?

The devaluation of the Russian ruble and declared moratorium on Russian debts caused significant liquidity issues in several Asian economies which yielded a massive loss for LTCM. With equity dropping to 600 million and an astronomical leverage ratio over 100 to 1, failure seemed imminent for LTCM and bailout procedures were underway [3].

Long Term Capital Management

Unlike LTCM, Lehman Brothers was a firm with decades of experience, overcoming some of the world’s worst financial situations including the Great Depression. In the early 2000’s, Lehman invested in mortgage backed securities, acquiring multiple prominent mortgage lenders.

Causes of Failure

Long Term Capital Management

“Too big to Fail” & Politics

How does this relate to LTCM?

Alexander Fleiss is the CEO of Rebellion Research, A Scientist, Teacher & Ai Researcher