Wait, it Has to be Your Bull

Kevin Hall has a good write-up on Ben Bernanke’s remarks regarding why he feels Lehman Brothers could not be saved.

Here’s the deal, a long story short, the gist of it, as it were… As Lehman was going to fail, Henry Paulson and Tim Geithner (then head of the New York Fed) assembled a meeting that included many well dressed men in New York. There, they discussed that someone should buy Lehman because of the mal effect its failure could have on the market. The Fed/government was not going to help, so no one took the bait, and Lehman failed.

My question is not as to why other institutions were saved (only to be bought later in a merger), but rather why were institutions like AIG helped to such an effect. Look no further than Matt Taibbi’s write up on AIG and how Goldman benefited from AIGs demise to the point where the debt contracts were paid on the dollar, not just pennies on it.

I know you couldn’t do anything to “save” Lehman, but I think we should let everyone know that the Fed and the Treasury pulled out every trick in the book to help every other institution after Lehman failed. Indeed, if there are such things as institutions, which are too big to fail, then what was Lehman?

Of course, all of this is moot in implicit state capitalism. The not-always-ready-state makes mistakes, or misreads situations that give the appearance that there’s a free market where no state agency makes any interfering maneuvers. So, in the end, I say it’s a job a well done.


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