Panic: End of an era

Panic is feeding on itself. It’s not just investors, but also the authorities who are panicking. What’s more, post-Lehman Brothers’ bankruptcy, the financial industry’s spirit has been crushed. Add in a further twist of deleveraging and one can see why the American International Group bailout hasn’t steadied nerves. The initial reaction to AIG’s rescue was positive. But the feel-good factor lasted a nanosecond. The authorities were caught between the devil and the deep blue sea. If AIG had gone...