Barclays' calculated risk

摘要

If allowing Lehman Brothers to go bankrupt will eventually be seen as one of the biggest mistakes of the financial crisis, Barclays' calculated bet on the future of the capital markets may turn out to be a winner. The collapse of Lehman destroyed the last vestiges of confidence in the banking sector and sent bank credit default swap spreads rocketing, but the real damage was the havoc it wreaked in the money markets. The default of Lehman holdings caused the collapse of the Reserve Primary money market fund. And with that, other money market funds - which play a crucial role in buying the commercial paper issued by corporations to fund their activities on a daily basis - ran for the hills, effectively destroying the short-term paper market.