I don’t know enough to see any conspiracy in it.
I do know that the scale of the reach and complexity of AIG, world wide, makes Lehman look like Payless Shoe Stores by comparison; maybe that had something to do with a difference in actions taken.
I also noticed that no sooner had Lehman filed for bancruptcy, Barclays was able to buy all of certain segments of Lehman, which local papers say will mean most of Lehman’s former NY employees will just have a new employer, not new jobs.
Which also pleads the question, why not simply bankruptcy for many of these other outfits?, instead of bailout.
If it won’t hurt the U.S. Treasury to buy “the toxic assets” for pennies on the dollar, and hold them until more favorable markets prevail, then why can’t consortiums of private investors buy the ailing Wall Street houses holding the “toxic assets” on the same basis, with the possibility of selling the toxic cum bargain assets later as the Treasury will?
Per wideawake, it seems that the CDS play a reasonable, if not valuable (from a social perspective), role in ‘normal times.’ However, we are faced with a tsunami of defaults in mortgage-backed securities that might overwhelm the capacity of protection sellers to gain control of the underlying securities - bankruptcy might be their better business decision.
It seems a matter of scale, and as said, that scale may be abnormally large as well as highly unexpected (or at least ignored while we let the good times roll).