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The word is "layman's". Lehman Brothers is the investment bank that collapsed in 2008. Cute typo. The simplest translation, though: The market believes that if
by goodside 15y ago
The word is "layman's". Lehman Brothers is the investment bank that collapsed in 2008. Cute typo.
The simplest translation, though: The market believes that if you were to loan money to Greece for two years, there's only about a 33% chance that you'll get your money back.
(That's 1.74^(-2) assuming risk-neutrality and a risk-free rate of 0%, which is depressing but sure makes calculations easier. In reality, the math is much more complicated, as nobody is actually neutral to asset risk, and you have to consider pseudo-defaulting via inflation, and the fact that bonds aren't entirely worthless after a default, etc.)
- goatforce5 15y ago> The word is "layman's". Lehman Brothers is the investment bank that collapsed in 2008. Cute typo. Maybe a Lehman has become a measure of the scale of financial failure. "Greek defaulting would be 12.72 Lehmans."
- z92 15y agoNow I am convinced the questioner probably was asking for this figure too. How many Lehmans equals Greece defaulting?
- tybris 15y agoActually, 0.39 Lehmans. Greek debt is around $240 billion and Lehman assets were around $613 billion. Of course, that number does not even consider that countries only partially and temporarily default, instead of fully and permanently like limited corporations, and that everyone who owns Greek debt has had a generous advance warning. This is really a comparatively minor crisis.
- chocoheadfred 15y agoWe have it then. A Lehman is a term of measuring crappy financial situations and is worth $613B. So, a correct use would be like "Don't worry, our national debt is only 25 Lehmans."
- goatforce5 15y agoTo me, a country defaulting sounds worse than a bank going under. Does the inability of Greece to raise capital have greater indirect costs and knock-on effects than the failure of Lehmans?