Welcome to the bloggy home of Noah Brier. I'm the co-founder of Percolate and general internet tinkerer. This site is about media, culture, technology, and randomness. It's been around since 2004 (I'm pretty sure). Feel free to get in touch. Get in touch.

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Global Bank Holiday

A few weeks ago there was a New Yorker article that chronicled the eight days leading up to and after the collapse of Lehman Brothers (as usual they’ve decided to only offer the abstract to non-subscribers unfortunately). Since I mentioned my penchant for process stories, it should come as no surprise that I quite enjoyed this one. The highlight, though, might have been this quote from a treasury official that basically boils the whole thing down to just a few sentences:

The treasury official described the situation: “Lehman Brothers begat the Reserve collapse, which begat the money-market run, so the money-market funds wouldn’t buy commercial paper. The commercial-paper market was on the brink of destruction. At this point, the banking system stops functioning. You’re pulling four trilliout of of the private sector” — money-market funds — “and giving it to the government in the form of T-bills. That was commercial paper funding GE, Citigroup, FedEx, all the commercial-paper issuers. This was systemic risk. Suddenly, you have a global bank holiday.”

September 30, 2009