Wednesday, December 12, 2012

Wi ran outta ca$h, Oh! Jush like datt...

Bankruptcies in US companies have continued...

History is a great teacher, but we are among the poorest pupils, aren’t we? For if we were to learn, the biggest bankruptcy ever, wouldn’t have happened as recently as last year. Yes, we are talking about Lehman Brothers, the global financial services behemoth that tripped over the weight of its own mountain of toxic securities and had a massive, fatal fall. It seemed that all prudent thinking people in the company had been handed over pink slips, the way the bank kept extending loans to people with dubious credit reputations. What were some of the best financial brains of the world thinking when they kept riding the inflating housing bubble till it said ‘Pop’? Your guess is as good as ours.

And in our obsession with Lehman, let us not ignore the some other mammoth companies who seemed to have an esoteric obsession with ‘11’. Billionaire investor Donald Trump is as famous for his classy hotels and casinos as for his trysts with business and personal bankruptcy. This year itself, Trump Entertainment Resorts Inc. has filed for Chapter 11, and Trump has himself stepped down as Chairman after major disagreements with bond holders. The company’s major failing has again been extreme reliance on debt and failure to understand market dynamics. The gambling industry in Las Vegas is teethering on the edge; for people are visiting casinos less and less in the slowdown. It’s unfortunate, since the company only emerged from bankruptcy in 2005. They need to really give up on their ‘gambling’ habits!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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