One year ago, the US authorities allowed Lehman Brothers to collapse, unleashing chaos. Capital markets froze, banks stumbled and a cascade of collapses seemed imminent. The financial system was seized with fear. A high-speed repeat of the American banking crisis that underpinned the unique misery of the 1930s threatened.

The US authorities were, however, right to allow Lehman Brothers to fail. They could not know how awful it would prove to be, and, when it comes to saving failing companies, governments should err on the side of inaction. Capitalism relies on the discipline provided by the lure of wealth and the fear of bankruptcy.