Remembering "the Great Panic of 2008 "

Was the Great Panic of 2008 Preventable?

Excerpts:

It's been two years since Lehman Brothers failed (Sept. 15, 2008)

...

Consider what happened after Lehman:

• Credit tightened. Banks wouldn't lend to each other, except at exorbitant interest rates. Rates on high-quality corporate bonds went from 7 percent in August to nearly 10 percent by October.
  
• Stocks tanked. After its historical high of more than 14,000 in October 2007, the Dow Jones industrial average was still trading around 11,400 before the bankruptcy. By October, it was about 8,400; by March 2009, 6,600.
  
• Consumer spending and business investment (on machinery, computers, buildings)—together about four-fifths of the economy—declined sharply. Already-depressed vehicle sales fell a third from August to February.
  
• Employment collapsed. Five million payroll jobs disappeared in the eight months following Lehman's collapse. The unemployment rate went from 6.2 percent in September to 9.5 percent in June 2009.
  

Comment: We are still in the middle of this muddle! Article conclusion: "Maybe saving Lehman would merely have postponed panic and requests for broader powers to deal with a weakening financial system. Citigroup and Bank of America, among others, needed help. The nature of crisis is that people are surprised and overwhelmed by events, and in that sense, the mistakes made in dealing with Lehman might have been unavoidable. One way or the other, the first draft of history is still being written -- and it remains very rough"