Q: And isn't Lehman a bank? Who's going to pay? Is the government going to add it to the national debt, tax us more, or print more money, hike the inflation rate, and make our money worth less? Very true... Semantics, semantics...
A: Lehman is a type of bank called an investment bank, or merchant bank. Typically they do not accept retail deposits from the general public, so their deposits are not insured. Instead, they lend money to businesses, or, more often, they arrange a public offering. They are regulated by the Securities and Exchange Commission, which doesn't mind if they go bankrupt. Banks are regulated by the Federal Deposit Insurance Corporation to ensure that they can pretend to make good on customers deposits. In fact, they cannot. Most banks have lent out anywhere from 60% to 99% of the funds they have received on deposit. Banks can do so because they have a license to do so, and if you tried it, you'd be arrested. The common term "fraud" is not applied to banks because they have a license. So, the term "fractional reserve banking" is applied, which is a clever way of saying "fraud." I don't htink the government is bailing out Lehman, nor AIG. My guess is they plan to let a few die as a way of pushing the others into line. Yes, the inflation rate they report is not the real rate, and they plan to print more money, making your money worth a whole lot less.
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