Zhang

It is interesting to follow the financial crisis in the US, especially the banking bailout. At very beginning, it was too big to fail to rescure Bear Stearns. However, the market adjusted itself to anticipate the Lehman rescue. Oh … wait a minute … it is too small to bail. “What’s a big deal … let it fail…” Poor Lehman had to file bankruptcy protection on September 15th. Well, market continued adjust its position and rationality. Just one week later, AIG started to attract more attention due to its propelling massive bailout. Well, it is too big to fail again. Now the question is why the federal government bails some out, and let some fail. Is it just a big-v.s.-small issue? Is it a rational behavior or irrational behavior? Why only 5 days can turn on and off the US federal government just like snap a finger?

… To be continued …