MIND CHRONICLE: THE BANKRUPTCY OF LEHMAN BROTHERS

The Bankruptcy of Lehman Brothers

Global State of Mind – Intellection and Affects – Pre/Post Lehman's Bankruptcy

The New Capitalist Syndrome

“When I find a short-seller, I want to tear his heart out and eat it before his eyes while he’s still alive"Dick Fuld, CEO, Lehman Brothers^a-b

On September 15, 2008, Lehman Brothers Holdings Inc. filed a petition in the United States Bankruptcy Court for the Southern District of New York seeking relief under chapter 11 of the United States Bankruptcy Code.^1-3While the Federal Reserve gave JPMorgan Chase a "$29 billion cushion against potential losses" when it bought Bear Stearns,⁴ Lehman Brothers received no bailout.

This Report provides empirical data quantifying people's Global State of Mind Pre/Post Lehman's Bankruptcy.

Global State of Mind is measured by the Macroknow Intellectual Intelligence (MI2) system. MI2 provides two sets of MIND Indexes:

Global Intellection Indexes – Awareness of and Attention focused on Desires, Aversions, and Powers
Global Affect Indexes – Emotions, Feelings, Core Affects, and Irrationality (Exuberance and Gloom).

Five sets of time periods are compared:

Pre/Post Bankruptcy Time Periods	Pre	Post
15-Sep-09 (00:00 AM PT) ± 1 Day	Pre 1	Post 1
15-Sep-09 (00:00 AM PT) ± 7 Days	Pre 7	Post 7
15-Sep-09 (00:00 AM PT) ± 30 Days	Pre 30	Post 30
15-Sep-09 (00:00 AM PT) ± 90 Days	Pre 90	Post 90
15-Sep-09 (00:00 AM PT) ± 365 Days	Pre 365	Post 365

The analysis provides deep insights into the reflexive dynamic interplay between:

World events, including
- The global economic collapse of debt-based capitalism, culminating in Lehman's massive bankruptcy
- The wars in Iraq and Afghanistan
- Actions by the Bush and Obama administrations to fix banking, economic, social, and welfare problems, including the takeover of Fannie Mae and Freddie Mac, and massive bailouts of banks and other organizations, including AIG, General Motors, and Chrysler.
People's State of Mind – Intellection and Affects – around the world.

The interplay between people's Intellection flow and the correlated chains of world events, including major financial events, is displayed in STREAM OF THOUGHT 2008 and 2009.

MOST CURIOUS FINDINGS

Changes in people's global Affects during the 7-day time periods pre/post Lehman's bankruptcy announcement include:

HAPPINESS soared from 50% to 80%; MISERY tumbled by 30%.
PLEASURE soared from 40% to 83.3%; PAIN tumbled by 43.3%.
IRRATIONAL EXUBERANCE (10%) gave way to IRRATIONAL GLOOM (3.3%).

Strangely, both 365-day time periods bracketing Lehman's bankruptcy announcement were characterized by IRRATIONAL EXUBERANCE.

IRRATIONAL EXUBERANCE facilitated bank excesses both pre and post the announcement.
The U.S. government bailout propped IRRATIONAL EXUBERANCE after the announcement.

THE NEW CAPITALIST SYNDROME

Why were people HAPPY? Why the PLEASURE?

Governments, banks, and other financial institutions must deal equitably with people's pent-up reactions to a multiplicity of real problems:

Gargantuan bank excesses,
Rules of law that permit excesses,
Deceit on a global scale,
Abuses of massive commercial powers,
Mass foreclosures and repossessions,
Ubiquitous personal bankruptcies,
Unreliable safety nets,
Joblessness, etc.

Social disorders threaten not just banks, but Capitalism itself. The disorders and their consequences now constitute a New Capitalist Syndrome.

Key findings are summarized below. More findings can be accessed via the Directory (left frame).

High Awareness

7 Days Pre/Post Lehman's Bankruptcy	30 Days Pre/Post Lehman's Bankruptcy

High Attention

7 Days Pre/Post Lehman's Bankruptcy	30 Days Pre/Post Lehman's Bankruptcy

Emotions

7 Days Pre/Post Lehman's Bankruptcy

30 Days Pre/Post Lehman's Bankruptcy

Feelings

7 Days Pre/Post Lehman's Bankruptcy

30 Days Pre/Post Lehman's Bankruptcy

Core Affects and Irrationality

7 Days Pre/Post Lehman's Bankruptcy

30 Days Pre/Post Lehman's Bankruptcy

Dr. Edward E. Ayoub
Toronto
September 24-25, 2009

^a Exposed: Dick Fuld, the man who brought the world to its knees. The Sunday Times, 14-Dec-2008, http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5336179.ece. [Quote added 31-May-2010.]
^b Stefan Stern and Ravi Mattu. Strengths become weaknesses. Financial Times, The Management Blog, 22-Sep-2009, http://blogs.ft.com/management/2009/09/22/strengths-become-weaknesses.
¹ Lehman Brothers Holdings Inc. (Chapter 11). Epiq Systems, 2009, http://chap11.epiqsystems.com/clientdefault.aspx?pk=de7ced2b-52e7-4172-92e1-9ec425933bd0.
² Voluntary Petition for Lehman Brothers Holdings Inc. Epiq Systems, 15-Sep-08, http://chap11.epiqsystems.com/ViewDocument.aspx?DocumentPk=edd16f12-c300-4f47-8126-796d96605fb6.
³ Lehman Brothers. Wikipedia, 24-Sep-09. http://en.wikipedia.org/wiki/Lehman_Brothers.
³ See, for example, Dan Freed, Lehman Brothers Bailout Concerns Mount. The Street, 13-Sep-08. http://www.thestreet.com/story/10437206/lehman-brothers-bailout-concerns-mount.html.