This post went through several videos on the financial crisis of 2008
Several questions were raised?
1 Should the US govt bailed out Lehman brothers.?
The prevailing thought was no It is a private enterprise Corporate greed
(the top dog said to have earned $200 to $500 million on their record year)
and that the govt is not empowered to assist private enterprise.
Well the bail out or even the guarantees could have been very small say $5 to $10B. Thereafter the govt poured in at least $500 B in QE funds which did not lift the economy soon enough And the TARP ( Troubled Assets Relief Program about $500 billion) Not to mention the recession and huge losses for many people
Could the FED have stopped the practice of sub prime mortgages. Alan Greenspan said that
it was part of the 30% where he made an ooops.
The US Govt was not in the mood for more bail outs of the too big to fail. It just rescued Bear
Stearns, Ginna Mae and Fanna Mae (the govt secondary mortgage markets
2. Was the private company Lehman entirely responsible for this failure
According to a Chief Economist Brian Wesbury lecture at TED talk, the indigestion at Lehman was the result interest rates that led to more mortgages and subprime mortgages It is also the fault of the firm management, not managing well the down side of subprime mortgages and investing heavily on such risky product Clearly Lehman was not in this alone
