Okay, folks. It’s been five years since Lehman Brothers failed, setting off a chain of unanticipated consequences that came within inches of melting down the world’s financial system. Had the Federal Reserve, other central banks, and the U.S. government not intervened and thrown trillions of dollars at the crisis to keep financial markets afloat, we would be talking about Great Depression II.
But rather than offering the conventional wisdom about what’s happened since Lehman filed for bankruptcy on Sept. 15, 2008, which is readily accessible in a zillion places, I’d like to offer some unconventional wisdom — at least, I hope it’s wisdom — based on my 40-plus years of writing about business. My specialty is fiascoes and failures, which is why there’s a toy vulture hanging from my office ceiling, a mid-1980s Father’s Day present from my children.
The true lesson I take from Lehman is that a simple move that was praised by free-market types at the time — letting Lehman fail — set off unanticipated consequences that brought the financial world to its knees within days. It was an object lesson about how things that seem simple on the surface can come back to bite you in unanticipated places in unanticipated ways.