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Gong Szeto

Lehman's Bankruptcy Statement




I'm just a designer, but it doesn't take a genius to read a bankruptcy statement. Take a look at the Lehman Brothers statement dated Sunday, September 14, 2008. Read the whole thing down to Exhibit A and the list of creditors — this is an historical document.

You think this is over? Citibank is owed $138 billion in bond debt, followed by the Bank of New York with $17 billion in bond debt. Lehman only owed the French (BNP Paribas) $250 million in loans, and Lloyd's Bank $75 million for a line of credit. But the poor Japanese are sitting on $1.67 billion in debt. The creditors are all major banks across the globe. These are amounts Lehman's banking investors will most likely have to write down in the coming weeks, which will mess with an already messy market.

This ain't over by a long shot. One simple bankruptcy statement and you are looking at Lehman Brothers's wake — and the numbers are staggering.




Posted in: Economy, Obituaries

Comment 29  |     |     |   Like 0  |   Tweet 0
Comments [29]
Oy vey...
Jw
09.17.08
09:37

I'm immediately reminded of the new film I.O.U.S.A., especially the info graphics around economics by Brian Oakes. There are also smart information graphics on the economic crisis published by The New York Times:

A timeline of the financial turmoil:
http://www.nytimes.com/interactive/2008/09/15/business/20080915_TURMOIL_TIMELINE.html

A map of the market capitalization of the leading players:
http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html Lastly, Bruce Nussbaum asks whether innovation is the cause of everything: http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2008/09/did_innovation_2.html
William Drenttel
09.17.08
09:54

that document is fascinating, almost macabre. the weird and chilling ticking of the box 'owes more than a billion'. how many times has that box been checked on one of those forms?

i dont know how it feels in the states at the moment (sitting here in europe) but the talk here is how this is the beginning of the end of america as a superpower. that you will never recover and how power will now shift towards the gulf, india, china, brazil..
i dont mean that as an inflammatory comment, but do you feel that? is that discussed over there? sorry for my niavety if it is is commonly held view. i am a total yankophile, so i mean no bad blood.

heres a quote from a banker in the guardian today:
'we will see a shift in power away from the USA and towards the developing world..where the savings ratio is high. we are going to see a new world order. America as a driver of the global economy is finished'
richard
09.17.08
10:02

@richard: Everyone I know feels something, that's for sure. What it is, I don't think we know.
Jw
09.17.08
10:13

What do you think the line weight is on that outer box? 5 point? 4 point?

And that kerning... cmon!

Oh wait these comments are off topic... for a minute I thought I was on a design blog.

Sorry!
John B.
09.17.08
10:18

It is bad but, also look at this chart.

You'll see that the amount of each company capitilization varies Lehman, while big, is/was more of mid size player.

AIG, on the other hand, is the one that had me worried.

The Fed let Lehman go because, it is a free market and Lehman took risks and lost. AIG is also equally stupid betting on insurance for all the bad loans. But it is a larger and more complex company.
JC
09.17.08
10:42

@jc

and then theres WaMu, nothing on the scale of AIG, but therein lies your average joe's bank acccount, if that goes..
http://slog.thestranger.com/2008/09/washington_mututal_by_the_numbers
richard
09.17.08
10:49

John B.: Last night I went to the Daniel Eatock small talk given by the AIGA. Eatock seems to be "getting away" with simply delighting himself and his many fans (myself included). The lecture was enjoyable, and the few questions asked at the end were polite and only lightly probing. Ultimately I think no one wanted to be so crass as to ask the one question that seemed to be on everyone's mind: "so how do you support yourself"?

Later though, over drinks with a friend, we speculated on how Eatock is able to work this way, to live this life. My guess was this: he has little to no debt.

You don't think economics--macro and micro--is a design issue? Guess again.
Hal Siegel
09.17.08
10:58

I'm with Jw on this one, I thought we were going to get a history of government document design trends.
It's still a fascinating document... if only for it's sheer obsurdity.
Stephen
09.17.08
12:00

anyone who reads design observer often would know that not all articles and observations are primarily tied to design. some are about culture and world events; moments that burn into your memory. wouldn't most agree, to be a good designer it is vital to have a vast understanding of culture and the world around you? we are watching history unfold as major shifts around the world take place. is it really necessary to ask why this article has been posted?
lauren
09.17.08
12:24

to the degree this meltdown is a design issue, do read the nussbaum link in drenttel's post above - i outline many of the systemic issues that are essentially systems design problems that were, well, designed poorly. there will be many "design" discussions around these problematic systems in the future. a related way design played a role in this is through the marketing and advertising of "it's OK to be in debt!!" by banks all over the country (see @hal below)

@richard: yes, it is time americans stopped being in denial about this. empires rise and fall. that is what history has taught us.

@hal: the economics of debt are at the heart of this. once upon a time debt was a cultural concept that was verboten. but the pendulum swing way the other way and now look where we are. see this article for how savvy banks were in marketing (via DESIGN!) debt instruments to the masses. see: http://tinyurl.com/6ks9jv

@all: a mid-career design friend commented to me that all this market stuff is irrelevant to her since "she doesn't have any investments to lose". i asked her if she had a bank account, and she said "yes, of course. it's earns interest".

the bad news is that even money market accounts are now affected (kind of unprecedented) everything is interconnected and nothing is safe. please don't shoot the messenger! see: http://tinyurl.com/67mqnt
Gong Szeto
09.17.08
12:29

Richard,

No, I'd say that the vast majority of Americans haven't a clue that this staggering financial crisis could bring down our self-proclaimed status as the "World's Only Superpower." We're far too dedicated to the dearly-held belief that America is the greatest nation the world has ever seen, and will always be thus. At the moment, we have a sitting president and an aspiring president, both of the same political party, who pander to the erroneous belief that everything is okay, and that America will always automatically be the superpower that it is--just because we're so gosh-darned great, that is. Never mind destroying our economy by spending untold billions of dollars on pointless wars, surely we'll be fine if they just say so enough times! And, of course, we are far too concerned about whether or not one candidate called the other a pig in lipstick to really pay much attention to this little financial upset. Besides, if we just consume some more, run up our credit card debt, and salute the flag, everything will settle down.
Rob Henning
09.17.08
02:06

First - No matter how much you try to interject design into this argument you will only get a back and forth political banter about how bad Bush, Obama, Biden, McCain, and Palin are. It will become boring as everyone sits with their talking points never really giving ground on understanding or belief.

Second - You can put as many safe guards and walls, you can design the perfect user interface with the perfect type spacing - people will refuse it or try to scam it.

Design is never complete... design can help but it will not save the world. People working together will save the world. People helping people will save the world. There is not one design in the world that will stop peoples human emotions and fallacies, not one flow chart and well designed economic oversight that won't have a human attached that will make a mistake or let themselves fail. Design is not perfect because new technologies are created that the first design could never of understood.

You want to know who did most of the damage in this economic crisis? You look in the mirror, you look at your family, you look at your boss, you look at your loan officer, you look at your bank, you look at the government - everyone was greedy. You cannot design your way out of that.

If you want to help people I suggest you do one of these things:

Volunteer at the United Way or similar privately funded organization.

Quit designing all the fancy business cards, mass consumed products, and magazine layouts and commit yourself to designing something like the life straw: http://www.vestergaard-frandsen.com/lifestraw.htm

In a nutshell — quit complaining and do something.
John B.
09.17.08
03:32

John B (Good):

You talking about United this Way?

Remember, in order to "do something" you first have to make (and save) something.
felix sockwell
09.17.08
03:45

In response to Drenttel's post.

A few years ago an acquaintance of mine who happens to be an economist who specializes in global economies told me in response to my anxiety over Bush economic policies that economies are enormous and shift at glacial pace. He said it would take decade upon decade upon decade of abuse for the american economy to be truly and permanently damaged.

Remember that much of what brought Lehman's down was derivative based investments, speculation, hubris, and the belief in a moral imperative.

It reminds me of the dot-com bust. Something I am intimately familiar with because being from San Francisco I saw it all unfold and implode. Greed. Money for nothing. Bankers just found out they are not immune to these things -- that there is no moral imperative to save their a$#!s, and they are ultimately responsible for their business decisions, just like the rest of us.

I think folks in Europe are thinking wishfully. Things will be hard here -- no doubt. But no matter how many times you kick a lion, he's still bigger than a cat.
aStringer
09.17.08
03:46

Felix, United Way. Your own community cause, Big Brother/Big Sister United Way whatever floats your boat.. Be apart of something or a volunteer. I am not talking about giving money. I am talking about direct person to person charity. Help someone help themselves just like the people in that story did.

Ya know - the whole "catch a fish".

For all this economic uncertainty people always forget that Americans give more to charity than any other citizenship on all levels of income.

I have tried to decipher the last comment you wrote:

Remember, in order to "do something" you first have to make (and save) something.

I have no clue what that means. Explain.
John B.
09.17.08
05:44

The implosion of the US financial system from investment houses, banks, insurance companies, mortgage companies is quite frightening because as Gong points out the interconnectedness of the system and the consumer/business drag on the economy.

The interconnectedness of the system means that the money in my checking and savings accounts will be worth even less. My long term investments will be fine in that I have 30+ years until retirement, but what about those who are retiring this year. Their financial and home investments are worth a lot less.

In terms of business/consumer drag...More small businesses, who are the engine of the US economy, will fail because it will be more difficult to get business loans. These small business include design firms, who will find fewer lenders or even clients seeking identity systems, books, or interactive websites.

The recession up until now has been mitigated by consumer spending (or overspending as our debt rates show). Now both consumer and business confidence has gone down the toilet with the Dow Jones.

What the Lehman document demonstrates is that this is interconnectedness and business/consumer lack of confidence means that the financial meltdown will be global. The European and Asian markets are already in a swoon. This means fewer design clients and jobs every where. Once upon a time you could ride out a poor American economy by going to Japan or Europe. Not anymore.

Final note on the design of the document. I do wonder what the appropriate aesthetic and information organization is for a document that says I've lost all my money. I ask this because as a person/ design anthropologist interested in the translation of democratic values into tangible experiences through design, what are the values embedded in a bankruptcy legal document? What tangible experience should it produce in the person filling it out or the legal office receiving it? Should it convey a sense of comfort "its going to be okay"? Should it punish you for being so fiscally irresponsible, especially for losing over $1 billion dollars. What's the appropriate typographical choice for the tangible experience of "I f#&8k up, globally."

Great post, Gong.

Dori
09.18.08
01:22

@aStringer

im not sure what to make of your lion metaphor. other than to comment that it depends on how many people are kicking the lion and the size of those people kicking it.

make no mistake, us over here in europe arent wishfully thinking about this crisis and the impact it may/may not have on the states. We are so intrinsically tied to you and this big mess, that we will fall too. i guess the difference is over here is that we've had our empires and seen them burn, and have seen others rise from the flames of our own percieved failings. its not so bad.

i think you have your head in the sand with reguards to this and whilst the impact and repercussions will probably take a decade or even generation or so to fully resolve itself, make no mistaske this is happening. to you, to me, to all of us. this is not the end of the west, but it is the start of a new way of thinking about the world and the quicker we realise that, the better able we will be to cope with that change. pride comes before a fall my man.
richard
09.18.08
06:18

ive just seen the news this morning that we've all pumped $180bn into the banks. our banks and governments dont have enough money to meet that bill, so where do they get it? there are two explanations it seems, they either print money (and we're in hyper inflation mode a-la Zimbabwe) or.. (from a blog ive just read):

'The money is coming from China, Russia, the Middle East (whose economic model is solid as it stipulates that currency must be based on gold and silver). They buy our debt and we, and our children, pay them back in taxes for decades to come. What we are essentially seeing here is our sovereignty been sold to China. We will pay taxes to them, we will work for them and they will be our landlords'.

I'll stop posting now, before you start thinking I'm overtly troubled by this situation and a bonkers to boot.
richard
09.18.08
06:30

The money is coming from China, Russia, the Middle East (whose economic model is solid as it stipulates that currency must be based on gold and silver). They buy our debt and we, and our children, pay them back in taxes for decades to come. What we are essentially seeing here is our sovereignty been sold to China. We will pay taxes to them, we will work for them and they will be our landlords.

This is (sadly) accurate.
debbie millman
09.18.08
07:45

I've been reading Nouriel Roubini's comments regarding the economy for about a year now. A very different view than most.

http://www.rgemonitor.com/blog/roubini
Monostereo
09.18.08
08:54

@monostereo

thanks for the link to roubini - i didn't know he had a blog. today's post (long) is pretty well argued. i have read a number of pieces over the last few days about a possible trend towards socialized markets, which is honestly one of the most intriguing ideas in decades. one question (about design) is how will this affect design since design that we know it today more or less only exists as a capitalist construct? is crowdsourced design the future? (ie crowdspring.com) is crowdsourced design management the future? (ie amazee.com)

with every catastrophe something new rises from the ashes. an optimistic view would be that we may be in for the most exciting time in our history where power structures are being levelled and design's connections to problem-sets become that much more intimate. the implications of this are far-reaching. i am psyched by the possibilities.

@dori
all the headlines today are about credit drying up. you will see contraction in the design industry. but most sadly, it will be hard for those talents within established firms to break out and get viable. i think the most exciting new work is when fed up and ambitious designers go solo. new visual memes are almost always birthed this way. (it is my own story btw, 15 years ago) we should all be concerned that this will slow down or halt for a while.
Gong Szeto
09.18.08
11:27

That America, in a broad sense, is waning as a world power is hardly in doubt, but at a more mirco-level I suspect we'll see an acceleration of an already 2-tiered nation, where those regions and industries (whether by accident or design) already conscious of and designing or creating for the world beyond our borders survive and in some cases thrive, where others will fail.

On one hand, I think this is exciting, as I expect much of the progress in things like sustainability, alternative energy, and the design and creation of products / services that serve specific cultures (rather than being pressed upon them) will come from groups and partnerships that discard national boundries, and I believe (hope? ;-) we Yanks still have much to contribute to them.

But I fear America more and more becomes a gated community, with a minority thriving in a limited number of urban areas, and a growing majority of people cut off from opportunity, whether through geography, race, class, etc..

I'd like to think feudalism had its day, I'm not particularly eager for a rerun.
jalexei
09.18.08
12:16

I always get nervous when I see any government document in Times Roman. Now I know why.

Basically... we're fucked.
Eric Baker
09.18.08
01:06

@Dori

Well, this documents aesthetics are comparable to that of a medical form of a global colonoscopy, I presume.
Ender
09.18.08
06:18

I am by no means an economist or even particularly knowledgeable in these areas, but I feel like history shows that almost all superpowers grow to a point of sloth and excess and then the inefficiencies do them in. I feel like our society now is saturated in excess.

I do not think that the US will collapse or anything that drastic, but I do think that globally there will be a more level playing field in the future. Like Richard said, that's not necessarily bad- look at the boom the EU has had and particularly the Pound long since Europe was the world's superpower.

I also think that as uneasy as it may make us, a level playing field is really the proper outcome of trying to spread democracy in the world.

I think the scariest thing is the degree to which we are living beyond our means. The national debt is terrifying to me especially as a young person just leaving college.
Steve D
09.18.08
09:50

Unfortunately your assumptions are totally off base and unfounded. Do you know the first thing about finance?

Please dude, if this is a design forum, write about design, stop pretending like you know anything about finance.

Leave that to the suits...
Kyle
09.19.08
03:48

Please dude, if this is a design forum, write about design, stop pretending like you know anything about finance.

Leave that to the suits...


Great idea, Kyle. After all, the suits have been doing a heckuva job so far.
Michael Bierut
09.19.08
04:30

...and, i quote myself...."This ain't over by a long shot. One simple bankruptcy statement and you are looking at Lehman Brothers's wake — and the numbers are staggering. "

today, the federal government proposed the largest bailout in this country's history. i wrote that on monday. this even took place four days later. even in my wildest bearish fantasy did i think this would happen so fast and on this scale.

@kyle: michael is right. it is those who have blinders on that have allowed said suits to get away with murder. take off those blinders and open your eyes. do it now.

i discuss the implications of this bailout on regular folks like you and me on my own blog -- http://gongszeto.squarespace.com

it is my version of a public service announcement. for the record, i am a democrat, and i work in the capital markets space designing actual securities trading systems where hundreds of millions of dollars flow through my design work every day, and i work with these "suits", and yes, i think i know a little bit about finance. but am circumspect at *any* politician being quite equipped at dealing with this stuff going forward. this is a very very very large design problem...massive.

AND I DON'T SEE ANY DESIGNERS AT THE TABLE. NONE. ZERO. NADA. kyle, please tell me why that is.
Gong Szeto
09.19.08
11:31



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