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Credit Crisis at Tipping Point

As troubles mount, US government's intervention shows signs of strain
By Jim O'Neill,  Newser Staff
Posted Sep 12, 2008 9:29 AM CDT
Credit Crisis at Tipping Point
Lehman Brothers headquarters, in Manhattan.    (AP Photo/Jin Lee)

(Newser) – The federal government keeps taking aggressive steps to keep the markets from flying off the rails, and yet here we are again: facing another crisis and wondering how much intervention is necessary, the Wall Street Journal reports. With government intervention showing signs of strain amid entrenched economic problems, the crisis might be entering a key stage. "It's not improving even slowly," says Laurence Meyer, a former Fed governor, now vice chairman of an economic-forecasting firm.

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"You could argue that you should let Lehman go," said another former Fed official who faced a similar dilemma a decade ago on an international scale. "Everyone knows it's been on the ropes since May. It wouldn't shock the market." But rescuing it could prevent more "chaos" in the market, he said, and help avoid a similar intervention in the future. Sound familiar?  (Read more economy stories.)

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