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...stayed away from Hollywood. And not without good reason - starting with William Randolph Hearst in the silent era, plenty of wealthy investors with stars in their eyes had lost big money in the high-risk business of financing single films. But in 2004 banks like Merrill Lynch, JPMorgan and Goldman Sachs found themselves with a glut of capital and no place to put it. Studios, meanwhile, were looking for a way to please their fiscally conservative corporate parents and share some risk. Some financial whizzes matched supply with demand and came up with a new way to bankroll films: institutional...

Author: /time Magazine | Title: Financial Crisis Puts Squeeze on Hollywood | 9/18/2008 | See Source »

...money. If, however, things move against you - as they did with Lehman - a 1% or 2% drop in the value of your assets puts your future in doubt. The firm increasingly relied on investments in derivatives to produce profits, in essence creating a financial arms race with competitors like Goldman Sachs. Even though the Fed had set up a special borrowing program for Lehman and other investment banks after the forced sale of Bear Stearns to JPMorgan Chase in March, the market ultimately lost faith in Lehman. So out it went...

Author: /time Magazine | Title: How Financial Madness Overtook Wall Street | 9/18/2008 | See Source »

...Right before the markets began to unravel last year, Lloyd Blankfein, chief executive of Goldman Sachs, presciently quipped that he hadn't "felt this good since 1998," referring to the Wall Street wipeout precipitated that year by Russia's defaulting on its ruble debt. Blankfein argued that confidence in global markets had built up to a dangerously giddy level and that investors weren't being compensated for assuming outsize risk in securities like esoteric bonds and Chinese stocks. Blankfein was right, of course, but even he wasn't paranoid enough. Though Goldman stands, along with Morgan Stanley...

Author: /time Magazine | Title: How Financial Madness Overtook Wall Street | 9/18/2008 | See Source »

...greed? Whoever wins will face a massive job of righting the financial ship and restoring confidence that has been badly shaken. The next President will have to cast away partisan predispositions and add the just-right measure of regulation and oversight to the mix. As Treasury Secretary (and former Goldman Sachs chief executive) Paulson recently said, "Raw capitalism is dead...

Author: /time Magazine | Title: How Financial Madness Overtook Wall Street | 9/18/2008 | See Source »

...such an unclear picture of who's on the hook to whom in this market that they feared the collapse of either firm would spark a chain reaction of defaults, and investors are so panicked by the unknown that they are selling shares in even seemingly healthy investment banks Goldman Sachs and Morgan Stanley...

Author: /time Magazine | Title: While the Regulators Fiddled ... | 9/17/2008 | See Source »

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