''The collapse of Lehman Brothers in 2008 introduced three new concepts to the public: Moral Hazard, Systemic Risk, and Too Big To Fail. The first was well-known but misunderstood, the second wasn't supposed to exist but did, and the third has helped morph the legacy of the 2008 banking crisis, the explosion of government debt across Europe, into a secondary banking crisis with a pernicious twist that is perhaps the real lesson of Lehman.
Before the 2008 crisis, 30 years of "markets-are-good" thinking produced an understanding of the economy where agents with rational expectations reacted to "the fundamentals" to produce efficient market outcomes. Armed with such ideas, regulatory authorities let banks regulate themselves. After all, it was their "skin in the game," so who better than the self-interested banker to look after the interests of the bank?..''
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