Crisis on Wall Street

WSJ: Lehman Totters, Merrill Is Sold, AIG Seeks to Raise Cash

Japan fell into similar trouble in the early 1990s (land boom, then crash). That I remember, no big bank failed, and still (15 years later) the banking system is a mess, completely sclerotic.

If the US is to avoid a similar fate, it needs to close or restructure as many banks as possible, as quickly as possible, so that we all can get on with our lives.

The worst thing for a financial system is not knowing ... not knowing how much assets are worth, not knowing whether other financial institutions are viable, not knowing how liquid a security might turn out to be.

The more quickly the US identifies healthy financial institutions (by closing down or restructuring the unhealthy ones), the more quickly will credit resume its flow.