How chaos made the squeaky wheel that forever gets the grease.That which is done is what will be done,
And there is nothing new under the sun.
—Ecclesiastes
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You just knew this was coming. In commemorating the upcoming two-year anniversary of the failure of Lehman Brothers the highly-charged political air against bailing out firms whose leverage was going bad is being cited for ultimately precipitating Lehman's bankruptcy...
The matter of choosing who gets bailed out and who does not is a fool's game. The problem lies in the solvency of the entire system of which all financial institutions are part. Choosing who lives and who dies is an exercise in playing make-believe imagining the mountain of liabilities that remain following limited write-offs (as has been undertaken thus far) again can be made viable and whole.
Our modern financial system's leveraged edifice was built on the premise that, leverage created by a myriad of securities could be extended infinitely. It cannot. Be that as it may, the magnitude of mispriced risk — debt — created in this epoch of securitization continues being denied. Thus, continued financial pressure in some place or another is sure to develop (we have seen this again and again over the past two years) and in no time make for added, chosen victims among the Lehmans and the Bears.
As Ross-Sorkin in the segment above presents a quote from Ben Bernanke during his appearance last week before the Financial Crisis Inquiry Commission, think about the following three: Fannie Mae, Freddie Mac, and AIG. The size of their bailout dwarfs Lehman Brothers' seeming capital needs. Most critically, though, is where went the Lehman spoils: a British-based investment bank — Barclays. Not cool. Definitely political dynamite to anyone recognizing living American history.
—Tom Chechatka
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