It now seems a matter of economic orthodoxy that letting Lehman fall was a mistake. But was it? Nobel prize winning economist Joseph Stiglitz, writing in the Telegraph, reckons that's exactly what we should be doing. Why burden a generation of taxpayers with propping up the chimera of a failed international derivatives market?
In the comments to Stiglitz's piece is this:
"To grasp how impossible it is for governments to re-float banks, consider this:
US annual GDP is about $15 tr
UK annual GDP is about $2.8 tr
World's GDPs for all nations is approx $50 tr
Total value of the world's property is estimated at about $75 tr
Total value of world's stock and bond markets is more than $100 tr
BIS valuation of world's derivatives back in 2002 was about $100 tr
BIS 2007 valuation of the world's derivatives is a whopping $516 trillion"
Letting all the exposed banks go bust and starting over again on the face of it has certain attractions. Who would lose?