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I guess the choices are incomplete because they assume static state - i.e. that people won't do things in response that will minimize or blunt the impact.
I don't even have enough of a sense of whether counterparty trading risk was enough at issue to be a threat to liquidity of the market as a result of the Bear situation, which means I don't know whether we might not have been better off just letting the outfit fail rather than have the govt bail it out. Sometimes we're better off just letting a company fail and letting the market find its own floor, rather than propping things up artificially. I have no clue whether this is or isn't one of those instances.
Also, is this causing or the result of contractionary pressures in the economy? Dunno....... I'm not wired enough to know. But I bet the dollar takes a further hit.
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