In a front page news analysis the NYT told readers that:
"but these days the problem for Europe may be that it has not had — and may not have — its own Lehman Brothers, at least in the sense that Lehman shocked Americans to take divisive and expensive steps to repair the damage."
There is no one cited in the article who says anything like this. In the wake of the Lehman collapse, the economy lost more than 700,000 jobs a month over the next nine months. While much of this job loss was probably an inevitably result of the bursting of the housing bubble, the financial freeze up associated with Lehman's collapse almost certainly worsened the situation. It is difficult to see how Europe or the world economy as a whole would benefit from the same sort of financial freeze-up.
It is also worth noting that, contrary to assertions in the article, the Fed began its special lending facilities long before the Lehman collapse. It expanded these facilities in response to the collapse and Congress did authorize the TARP, but it difficult to see how the economy on net ended up better off as a result of the crisis that followed the Lehman collapse.
Of course there are scenarios that could be positive in Europe or could have been positive in the U.S. For example, if the government had used the bankruptcies that would have resulted from letting the market run its course to restructure the financial system, then the country might have a much more efficient industry. Goldman Sachs, Morgan Stanley, Citigroup and Bank of America all would have been bankrupt, giving the government an opportunity to reestablish these banks as a set of smaller financial institutions that were more focused on serving the productive economy.
This is a possible, but not likely outcome from a collapse in Europe. Just as is the case here, the financial industry holds enormous power. It is likely that they would be able to garner the government assistance to keep their current structures largely intact.
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