The anniversary of the sinking of USS Lehman has produced a spate of articles, including this one in the New Yorker by James B. Stewart, at EIGHT DAYS: The battle to save the American financial system (I think you need to be a subscriber to read this.)

Stewart describes, sympathetically I would say, John Mack’s indignation at the alleged shorting of Morgan Stanley stock, and writes that Mack wanted the SEC to ban shorting. Eventually they did indeed forbid the shorting of hundreds of financial stocks, many of them the stock of companies who themselves provided stock loan services or ran long/short strategies themselves.

During the collapse of emerging equity markets and their currencies about ten years ago, our financial leaders explained to the Asian markets that that’s how capitalism works — money zooms in and money flies out.

Stewart’s subtitle, The battle to save the American financial system, is quite to the point. At bottom, it’s not Citi, AIG, Goldman or Morgan that is too big to fail. What’s happening is that the US believes, that, IOHO, the US is too big to fail.