Andrew Ross Sorkin is both a NY times correspondent and a morning anchor on CNBC. Poor guy. He is so sad this morning about Brexit.
He said this morning that he is surprised that the reaction is so muted to the Brexit vote. True, markets are down, but he, no doubt, was hoping and expecting a much larger negative reaction to the Brexit vote.
He mused that when Lehman went bankrupt, there was very little reaction for several days and then all hell broke loose. He left out the key part of that story. The Lehman bankruptcy is not what sparked the massive stock sell-off in the Fall of 2008. What sparked the sell off were the announcements coming from the Federal Reserve and the US Treasury.
Both the Fed and the Treasury embarked upon major bailouts, completely unnecessary and dramatically unsettling to the markets. Compared to the announced Fed bailout policies and the TARP program put forth by the Treasury, the Lehman bankruptcy was a non event. It was the US government policy reaction to the Lehman bankruptcy that caused the sell-off. The markets, after the government bailouts were in place, lost more than 40 percent of its value from the date of the announcement of the bailouts. The markets barely reacted at all to the Lehman bankruptcy, which occurred several days earlier.
Go back and look at the facts. Facts are facts. Even Andrew Ross Sorkin, trying to spin things his way with the "delayed reaction" interpretation is simply refusing to face reality. The markets hit the nail on the head in the Fall of 2008 when they spun out of control as soon as the policy response to the Lehman bankruptcy was announced. The Lehman bankruptcy was not that big a deal and markets knew it. Revising history, as Sorkin is wont to do, is just sour grapes expressed by one of the leading elitist pundits.
Today, we know those markets were correct. The 2008 Fed and Treasury policy responses are responsible for the pitiful economic recovery that we have endured for the past eight years. Lehman wasn't the problem; the bureaucrats were, and still are, the problem.