Common Sense In Government?

Or just out of money?

Wall Street readied for a potential Lehman Brothers Holdings Inc. bankruptcy after Bank of America Corp. and Barclays Plc pulled out of talks to buy it and the government indicated it wouldn't provide funds to prevent a collapse.

Banks and brokers today held a session for netting derivatives transactions with Lehman, or canceling trades that offset each other, in case the New York-based firm files for bankruptcy before midnight.

``The purpose of this session is to reduce risk associated with a potential Lehman'' bankruptcy, the International Swaps and Derivatives Association said in a statement today. The ISDA includes 218 banks, brokerages, insurance companies and other financial institutions from the U.S. and abroad.

The step indicates Wall Street lacks confidence that three days of talks to find a buyer for Lehman, held at the Federal Reserve Bank of New York, will be successful. Treasury Secretary Henry Paulson, who has led the talks with New York Fed President Timothy Geithner, was adamant two days ago against using taxpayer funds to help a purchaser take Lehman over.

This is the kick in the ass that the economy needs.  Yes, a major company collapsing will harm the economy, but it will provide an example to others as to not make rash decisions, hoping that the government will bail you out.

I've railed against other bailouts such as the Freddie and Fannie fiasco's, and I don't think the government should be bailing out companies that make bad business decisions.  It encourages it, and I don't seem to remember businesses paying back the bailouts when times were good.

So, yes it's sad to see ordinary people lose their jobs at Lehman Brothers, but they wouldn't be in that spot if their bosses didn't make rash business choices.  These things happen.  Talented people will find other jobs, and those who made these decisions should be unemployed for a while to really drive home the point.

Travis

travis@rightwinglunatic.com