Monday, September 14, 2009

Lehman and the Financial Crisis



One year ago today Lehman Brothers filed for bankruptcy. The weeks that followed are among the most dramatic in U.S. history. They led to a massive government intervention in the financial system—an intervention that will likely change that system forever.

Many people say that letting Lehman fail was the mistake that caused the financial crisis. To them, the lesson is that the government should never allow any "systemically important" financial institution to fail. If only Lehman had been bailed out, the story goes, we could have avoided much of a 45% drop in the S&P 500, a 4% drop in output, the rise in unemployment to 9.7% from 6.2%, and the $784 billion "stimulus" to top off a $1.59 trillion deficit.

This story is false.

The Lehman failure was not an isolated event. It was a movement in a dramatic crescendo of failures.

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Posted by: Nicole Nelson

3 comments:

  1. This crisis has hopefully taught our generation a lot of lessons in spending wisely and saving because something this horrible can happen. Sadly, our generation though lessons may have been taught we will have to be paying for all the mistakes made by the people and by the government. Why save some banks and not Lehman??
    Posted by:Sara Sindelar

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  2. I felt indifferent with Lehman Brothers because many other corporations made the same or maybe even more mistakes than Lehman, yet the government let this corporation to fall through the cracks. For example, the government bailed out AIG, GM, and so many others. I feel the government could've helped Lehman as well.

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  3. The comment above was posted by Lily Mei

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