or there were outsized incentives to run it into the ground.
ping
Well, I certainly got a good reminder that the “value” of something is not what some godlike higher authority dictates but only what other people are willing to pay for it.
It’s been an expensive lesson.
So that’s what President Bush meant when he said that they did not want a chaotic bankruptcy for the Big Three.
The problem with the “orderly bankruptcy” is that it would have required the US Government to put a significant amount of money on the table to keep Lehman solvent in the interim. Hindsight may tell us that we could have gotten our money back, but, at the time, we were tired of being called to cover the tracks of a company which had been spectacularly mismanaged. The sums, as I understand it, would have been greater than what we laid out for Bear,Stearns.
The true fault lies with Wall Street which, instead of creating exchanges for derivatives, they wanted to keep all the profit to themselves. There was just one problem: the success of their derivatives book depended on the assumption that they could never fail which, given the Bear, Stearns and Lehman fiascoes, was a woefully wrong supposition.
The Lehman bankruptcy was a classic case of somebody had to be made an example out of.
For example.....We’ve all been guilty of speeding. We complain when the cop pulls us over and say “But golly gee willikers everyone was going 80. Why did you pull me over?”
Answer: you broke the law and someone has to pay.
It’s weak. But somebody had to serve as the poster child to tell American businesses that you can’t lose billions, make stupid business decisions and expect taxpayers to bail you out.
Think next time. Or this could be you.