If you're new here, you may want to subscribe to my RSS feed. If you have any questions, please see my policies page or if you would like to contact me, you can do so here. You can find out more about me here. I sincerely thank you for visiting!

Another weekend of intrigue in the financial markets. Two brokerages didn’t survive and it looks like the US’s largest insurer might not either. I’ve been watching the posts on The Big Picture all weekend with amusement. He’s taken an almost gleeful approach to the implosions, though I’d imagine it’s more of an “I told you so” approach.

This morning he posts why he thinks Bear Stearns was saved and Lehman was not. I think the first point is the key:

• Don’t just risk your company, risk the entire financial world. If you merely destroy your own company, you won’t get rescued. You have to threaten to bring down the entire global financial system. The fear and disruption caused by a Bear collapse is why it was saved.

Because Lehman did the prudent thing and tried to save the company by paring debt and assets (albeit a little too late) they weren’t rescued by the Fed. Because Bear continued to be reckless, it was saved. Apparently every buyer wanted the same protections that Chase received when it scooped up Bear and the Fed decided to draw a line in the sand. It’s good that they finally decided that if the banks wanted deregulation then they had to take the good and the bad, but it might be too late.

It will be an interesting week.