We were worried this time last year that failing to bail out Lehman's might cause a financial collapse; well we were right. We also said the UK would be in deep trouble in short order because of HBOS and RBS - yup spot on.
We also said Lehman's should have been allowed to go under as Northern Rock should have been. One year on, I still think on balance this is correct. I wanted AIG to go too, but did not understand that if it had done it would have taken several banks and countries with it; good on Paulson for saving them.
Although allowing Lehmans to go was a terrible experience, it was cathartic, people faced up to the true enormity of the crisis and Government's reacted. Without it we would have soldiered on into a prolonged down patch which may have lasted for years and years. Instead we got a short, sharp shock. Plus the unwind from Lehmans is not the end of the world either that many had made it out to be. In fact, it encourages me to think it would still have been right to let Northern Wreck sink; that business is going to cost the taxpayers billions instead of the bondholders and shareholders.
A failure like Lehmans won't happen again though and that is also a good thing; lessons have been learned the hard way. Better than not at all.