Few people have questioned whether the non-bailout of Lehman Brothers was a good idea. In fact, to some it was downright refreshing that the government finally let a financial company fail. But a debate has broken about whether the non-bailout precipitated the almost unfathomable crisis that has engulfed the financial world in the last few days. A Financial Times item suggests that if Lehman had been saved, we would not have had the massive rise in CDS spreads on Morgan Stanley and Goldman Sachs bonds, which precipitated a real crisis of confidence. It's an interesting argument. Not everyone is going to buy it. At some point, the cards were really going to get shaky, even with a Lehman bailout.

For more:
- here's the Financial Times item

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