posted by
December 14, 2011
Cafe Hayek
by Russ Roberts  
Posted in Commentary

"This is a common view -- that Lehman’s collapse and the failure of the policymakers to rescue Lehman precipitated the crisis. It could be true but the evidence is quite cloudy. The claim also ignores the possibility that it once the Fed had rescued the creditors of Bear Stearns in March of 2008, lenders to Lehman (such as Reserve Primary–a money market fund!) figured they were safe. It was the unexpectedness of the government actually letting creditors lose money that caused the dislocations, not the failure of Lehman, per se." (12/13/11)


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