September 15, 2008 / 3:06 PM / 10 years ago

Across the pond, people fearful after Lehman fall

LONDON (Reuters) - People from the restaurant to the cab trade prepared for the worse on Monday as the ripples of U.S. banking giant Lehman Brothers bankruptcy were felt across the Atlantic.

A broker trades euros on the currency market at BGC Partners in London September 15, 2008. REUTERS/Suzanne Plunkett

“This will directly affect us,” said butcher Trevor Chelsea, 45, in London’s Smithfield meat market. “We supply to restaurants in the City and when people lose their jobs there they will stop eating out.”

“It is like the housing market. Everything is connected. It is not just the bankers who will be hurt but all the people in the places where they spend their money.”

After the biggest banking failure in U.S. history, many people blamed the banks themselves for getting into trouble and the government regulators for letting them.

“First of all the Financial Services Authority — I call them the Fundamentally Supine Authority — should all be shot. They have sat back and allowed this mess to happen,” said Andrew Brodie, 62, owner of the Plum Tree bar in central London.

“We need the government to assume some responsibility, to fund the banks cautiously but appropriately,” he added.

The term “greed” was on many people’s lips.

“It was greed and the bubble has burst,” said London taxi driver Barry Hunt, 45. “They should change the rules to make the banks more cautious. They are now after what happened last year with the sub-prime problem. But they weren’t before that.”

The Lehman demise and the fire sale of Merrill Lynch follow the failure of Bear Stearns and the government bail-out of U.S. mortgage giants Freddie Mac and Fannie Mae which in turn come after the nationalization of Britain’s Northern Rock.

At the core is the sub prime mortgage crash and the associated debt bubble that, while it had indeed made a few people very rich, had given millions of others unfounded feelings of wealth and the lifestyles that accompany it.

“It is absolutely crazy. The banks have encouraged people to spend too much, to get into debt. It is out of control,” said bricklayer Pete Hunter, 45.

In Berlin 73-year-old pensioner Dieter Schleier was scared: “Its tragic and it seems like it’s the beginning of the end. I’m not yet affected personally, but I am scared about the future.”

In Amsterdam, cook Rene Daalhuizen, 50, agreed: “It is not a pleasant thing ... In some time, a year or so, this can also happen in the Netherlands and than we will feel it.”

Many feared the bank collapses were the tip of the iceberg.

“There will be a knock-on effect from Lehman’s. It won’t end here. I wouldn’t be very surprised to see one of the big five banks here go down,” said University of London professor of education Charles Posner, 62.

Speaking in Cairo, IMF Managing Director Dominique Strauss-Kahn was also pessimistic. “The consequences of the financial crisis are not over,” he said.

Slideshow (3 Images)

For cabbie Hunt the answer is simple: Put a woman in charge.

“I think women should run the banks. They are far better with money than men,” he said.

(Additional reporting by Kate Kelland in London, Alastair Sharp and Alaa Shahine in Cairo, Josie Cox in Berlin and Inge de Brouer and Gilbert Kreijger in Amsterdam)

Editing by Richard Balmforth

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