Why Lehman? Why now?
Just one question today: Why now, all of a sudden, have the Fed and the Treasury decided to do the right thing and let one of these rotten-to-the-core financial titans go into liquidation?
Except, of course, that's not quite what's happening. Lehman itself isn't getting a bailout, but the big-money boys who might wind up as collateral damage can show up at the Fed this morning and borrow at very generous terms.
But the question remains: If Bear Stearns merited $29 billion in federal guarantees to JPMorgan Chase, and if Fannie and Freddie are worth a yet-to-be-determined amount on Uncle Sam's balance sheet, why is Lehman getting thrown under the proverbial bus?
My hypothesis is that Paulson and Bernanke is still trying to figure out how much they'll be on the hook for Fannie and Freddie, and thus how much they're going to have to monetize — that is, print new dollars to make up the difference. Refusing to take on anything else at the moment has the added benefit (for them) of propping up the dollar and driving down commodities further (oil below $100 this morning? Huh?) before the inevitable inflationary binge.
But that's only a hypothesis. It assumes some sort of logical calculus at work, and that might be assuming too much. What say you? Let 'er rip in the comments.