pacalis

Lehman's Collapse, Revisited

You all miss the point. Lehman is NOT the event. Bear Sterns IS the event.

You're all sucked into this new cultural myth that the Lehman failure was some sort of important turning point. But if you didn't have your head up your asses the year earlier you would have known that the smart money was freaking out about the uncertainty regarding the Bear Sterns positions. The Fed created a "how to game the system" roadmap in the Bear Sterns case that played out for everyone but Lehman in the next year.

Pinning the Blame on the House Republicans

If we're placing blame it's clearly at the foot of the bush administration. Let me count the ways...
1. Letting all those jackoffs at Enron off the hook and sent unregulated baskets of quants into other sectors of the economy.
2. F*cking up the Bear Sterns problem the year before Lehman - how quickly everyone forgets...
3. Creating "special" legal frameworks to sidestep bankruptcy proceedings and provide new powers to the fed and treasury
4. Creating a culture of profit from incompetency - i.e. the "we're not bad people, we're just not responsible because we don't know what the f*ck we're doing in this complicated world...but yes, I made a lot of money this year" defense

Everyone of those firms should have gone through bankruptcy proceedings, and congress should have enacted new penalties and definitions for breach of fiduciary duty. Imagine that - individuals running firms that are too big to fail are too important to be competent or held to a standard of trust.