impressions on US economy

Last September 12, 2008 as reported on Reuters; the US government refused to provide aid or assistance to help rescue Lehman Brothers

They highlight 3 important differences between Bear Stearns and Lehman Brothers cases and why was one "provided assistance" and one wasn't

First, Lehman’s business mix differs from Bear’s.

While Lehman is bigger than Bear, it is less deeply involved in the systemically important credit default swaps market and clearing system.

Second, while the crisis at Bear stunned the markets, other financial institutions have had six months to prepare for the possible failure of Lehman. In the Bear crisis, the risks were extreme in part because they were unknown and unmanaged.

The New York Fed has conducted extensive stress tests in order to attempt to evaluate the impact of a Lehman failure on markets such as the CDS market and it believes the systemic risk is quantifiable and lower than the risk that was posed by the imminent collapse of Bear back in March.

Regulators have also evaluated the risk mitigation strategies put in place by other banks and the authorities believe them to be robust.

That suggests the risk that a Lehman collapse could trigger a domino effect of failures at other financial institutions ought not to be great

Third, the Fed now has in place an emergency liquidity facility to guard against the risk that Lehman could suffer the kind of sudden funding strike in the repo market that sank Bear.

This should ensure that if Lehman does collapse, it does so in a slower and relatively orderly fashion, allowing it to wind down business operations in a way that does not cause sudden shocks to markets.

Hmmm......

I am not an expert but isn't a collapse of a financial institution (big or small) could be and would be counter-productive to a free-enterprise economy like the US?

Isn't an economy's health and "robustness" based on an individual investor's perception on how strong it is?

Whatever your individual decisions are..... agree or disagree with what the current US government did; at least that is still a concrete stand on the issues at hand.

If you've read my previous posts.... I'm still waiting for those general sweeping statements on what a US Presidential candidate will do to the US economy.... especially after everything that happened so far recently.

Problem is; he's still waiting for his economic advisers and economic policy makers. Most of them are still playing for teams at the Quidditch World Cup and finishing their dissertation for their PhD at Hogwarts.

sigh..... deep sigh.....