Boom Bust Boom Page #3

of other banks. I wonder if their balance

sheets are as bad as ours." And they started to think, "They probably are

because we're all doing

the same stuff." And then they say, " You know,

maybe when that loan comes due, "we should call it in, "say we're not going

to renew it anymore, "because we think, maybe, you could get in trouble

and we wont get paid." Suddenly, all the banks

started doing this. And, basically, that is when the global

credit markets froze up. Banks wouldn't lend

each other anymore. And so that turned into

a massive liquidity crisis, and that is what

set off the whole thing. So this layering

of debt on debt, financial institutions owing

other financial institutions, turns out to be

extremely dangerous. News you're waking up to: the American investment bank

Lehman Brothers has filed

for bankruptcy in New York. That's happened in

the last few minutes. It means the Wall Street

institution, which has been

in business for 150 years and survived

the Great Depression, is now the most high-profile

casualty of the credit crunch. JONES: It was not only

Lehman Brothers that went bust. In the U.S., Citigroup were

rescued by the U.S government with guarantees to the tune

of 300 billion dollars. AIG were bailed out for

a 182 billion dollars. The best things in life

are free But you can give 'em

to the birds and bees Bear Sterns was taken over

by J.P. Morgan after the U.S. government

secured them with a 30 billion dollar

guarantee. Fannie Mae and Freddie Mac, government-backed

mortgage lenders who were involved

in the sub-prime

mortgage lending, were rescued by

the Federal Housing

Finance Agency. Merrill Lynch was taken over

by the Bank of America. In the UK,

the Royal Bank of Scotland was bailed out

by the UK government for 20 billion pounds, HBOS was bailed out

for 13 billion pounds, and Lloyds

for 4 billion pounds, on exactly the same day,

October the 13th, 2008. Money don't get everything,

it's true But what it don't get,

I can't use Sir, another insurance company

is going under. Now determining most prudent

move for insurance company. ( chicken crowing ) Bailout! The most prudent move

is a bailout! I remember sitting, um...

uh, in a room. Bit like this one,

at the Treasury, back in 2008, around the time

of the Lehman crisis. We sat there. During the first half hour

of that meeting, the share price of one of the biggest banks

in this country fell by 50 percent. In the 2nd half hour

of that meeting, the share price

of that same bank rose 50 percent. We knew at that point,

this wasn't Kansas anymore. I mean, if the 2008 crash

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