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Wall Street in turmoil, world markets reel under shock of Lehman Brothers’ crash

Posted on 15 September 2008

Lehman Brothers, the fourth biggest American investment bank, filed for bankruptcy early Monday, leaving 30,000 jobless worldwide and $600bn in debt on what some called the most catastrophic day in a century for global financial markets.

The European Central Bank injected 30 billion to steady the markets, followed by the Bank of England, which earmarked 5 billion sterling to arrest the City’s slide.

Lehman Brothers crashed after Barclays and the Bank of America withdrew their bids to rescue the 158-year old banking institution and the federal government refused a bailout.

The Bank of America bought out the limping Merrill Lynch for app. $50 bn, but the American International Group Inc. (AIG), once the world’s largest insurer, is struggling to survive.

Ten US and foreign banks set up a $70bn fund to save troubled companies.

The collapse of the three biggest names on Wall Street threatens to wipe out many billions of dollars from pension funds and the banking and insurance industries in a worldwide chain reaction of turbulence.

World markets fell as The US government and Federal Reserve failed to in their efforts to bring the financial landslide under control over the weekend in time for Monday’s trading.  Some firms linked to the failing banks may be rescued while others will have no option but to file for bankruptcy.  Lehman Brothers’ UK business Pricewaterhouscoopers has been placed into administration.

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