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The music stopped as the investment giant Lehman Brothers filed for bankruptcy 10 years ago Sept. 15. It was a tipping point in the sequence of events that soon became known as the global financial crisis. The event upended American economic complacency and set in motion a wave of populist animus against finance. While the crisis was arrested—albeit in a way that would sow future problems—the populist flames burn away.
Should the U.S. government have saved Lehman? Prices of Lehman debt before the bankruptcy indicated some combination of overly sanguine investor views of the firm’s condition and a belief that a bailout was likely. Several commentators, including Alan Blinder on these pages, have identified the failure to intervene on Lehman’s behalf as a key policy error.
But the questions that should take center stage today are broader. First, how much flexibility should policy makers have to bail out ailing financial firms? Second, what types of intervention do least to undermine public support for a well-functioning financial system?
JJ Editor's Picks
"During the debate on Prime Minister Boris Johnson’s new Brexit deal in the United Kingdom’s Parliament on Saturday—which ended, as these things often have, with a vote calling for another delay—Johnson exposed the most basic blindness of Brexit..."
"Mick Mulvaney, the acting White House chief of staff, wants to change his story about Ukraine. On Thursday, at a press briefing, Mulvaney confirmed that when President Donald Trump suspended military aid to Ukraine in July, one reason was that..."
"I travelled with Bedouin in the Western Desert of Egypt. When we got a puncture, they used tape and an old inner tube to suck air from three tyres to inflate a fourth. It was the cook who suggested the idea; maybe he was used to making food..."
"The ultrasound technician places the wand on my daughter’s lower abdomen and moves it slowly across taut skin glistening with gel. I’ve been holding my breath since being ushered into the dimly lit cubicle to witness a sonogram that will..."
"Even many Democrats are criticizing Senator Elizabeth Warren for refusing to admit, in plain words, that her Medicare for All plan will require taxes to increase. They’re right to complain. The point could hardly be simpler: All presidential..."
"How do you update Watchmen for 2019? That might sound like a question with an obvious answer: You just do Watchmen. After all, the graphic novel, which has been consistently in print since its 12-volume run ended in 1987, is pretty terrific..."
"The climactic face-off of the 2019 Israeli Apartheid Week at the University of the Witwatersrand in Johannesburg took place on a wide, sunny plaza, between a statue dedicated to the millions of anonymous miners who had toiled under inhuman..."
"Mark Zuckerberg has rarely been so compelling. Facing increased scrutiny — especially after leaked audio of an internal meeting in which Zuckerberg called Sen. Elizabeth Warren (D-Mass.) an existential threat — the Facebook CEO outlined his..."