Japanese industrial output rose for the seventh consecutive month, by 1.4 percent, raising hopes that the governement’s economic stimulus was bearing fruit, according to figures released by the Ministry of Economy, Trade and Industry. Inventories dropped to their lowest levels in 21 years. Predictions were good for continued strong growth in manufacturing in October and November, as well.
The output gains were led by auto manufacturers and makers of technology. Industrial output is still down 18.9 percent compared to a year ago, but the Bank of Japan has been mulling whether to draw down the economic support it has given to financial firms to rescue the economyafter the financial meltdown following the collapse of Lehman Brothers late 2008. Reuters, Xinhua
The fall of New York investment bank Lehman Brothers in September 2008 will be remembered as the trigger moment that brought the world economy to its knees late last year. Media worldwide are using the anniversary to reflect on what happened, to interview the protagonists and, in the case of BBC2 TV, to air a docu-drama 9 September that recounts the story.
Lehman was so big in so many different markets that when the US government allowed it to go bankrupt, it caused a convulsion among its many counter-parties that caused the credit markets to seize up, and brought normal banking activity to a stop. One example: Reserve Primary Fund, a money market manager that put its investors’ money in safe, generally, low-yielding assets had to write down $785 million in Lehman debt that was worthless the day after it went bankrupt.
It was only the massive intervention by central banks and governments worldwide that calmed markets. There are still questions as to why other major investment banks were allowed to merge, or were given US government money to save them. The day after Lehman Brothers fell, the US Treasury, then still led by Henry Paulson, stumped up $85 billion to save US insurer American International Group. Bloomberg, MarketWatch, Vanity Fair (lengthy interview with former US Treasury Secretary Henry Paulson), Reuters (interview with Lehman ex-CEO Richard Fuld)
Richard Fuld, former CEO of Lehman Brothers brokerage house, has sold the Florida island mansion he bought in 2004 for $13 million for a trifling $10, to his wife Kathleen, reports the New York Times, which quotes a lawyer who calls it the oldest trick in the books, but one that might not work for Fuld because of residence laws.
