Monday, September 15, 2008

(Almost) Betting the Farm

by Tom Bozzo

Suzanne showed this morning that she's been the spouse of an economist maybe a little too long, as she asked, "Would I be doing my part to help the situation if I went shopping today?"

In alarm-clock land, NPR seemed to be in "Don't Panic!" mode as the news of course led with the Lehman story but they didn't mention, e.g., European markets being down 4-5% as of this (Monday early AM CDT) writing. Then David Wessel of the W$J was asked if this was the wildest time ever, and he lifted my spirits by answering that he was not alive in 1929.

We ran the nightmare scenario courtesy of Nouriel Roubini here at AB over the weekend. Our own Ken has an excellent follow-up explaining why we really should be glad that his Old Firm was bailed out as in that case a broader financial 'contagion' was 99 and 44/100 percent likely; if the financial world was Smart then the Lehman failure ought to be priced in. It's the 'if they were smart' part that's worrisome in a 'how do you think we got into this fine mess' way.

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