Soros told the New York Times in an interview published Wednesday, “This crisis has the potential to be a lot worse than Lehman Brothers. That is why the problem is so serious. You need a crisis to create the political will for Europe to create such an authority, but there is still no understanding as to what the authority will do.”
At the time of its Sept. 15, 2008 collapse, Lehman was the United States’s fourth-largest investment bank and employed 24,000 people. In the trading session following the announcement, the Dow plunged over 500 points, which was its biggest point loss since the Sept. 11, 2001 attacks. The Post reported at the time that “about $700 billion in shareholder value disappeared in a single day of trading.” It should be mentioned, however, that Lehman’s collapse was not the only major Wall Street shake-up driving the markets that day. It was also the first trading session after Bank of America agreed to purchase Merrill Lynch, a merger arranged after it became clear that the latter institution would be deeply hurt by Lehman’s failure.
The prominent investor’s suggestion that Europe’s situation could eventually be worse than that tumultuous time on Wall Street is a clear sign that he thinks Europe is in serious trouble.
What do you think? Could Europe’s debt crisis rock the global financial system more than Lehman’s failure did three years ago? Tell us in the comments section.