John Berlau, of the Center for Entrepreneurship here at CEI, has the following to say about the Lehmann Bros collapse:

My reaction to Lehman Brothers’ declaring of Chapter 11 bankruptcy and the refusal of Treasury Secretary Hank Paulson and others to take extraordinary Bear Stearns-like measures for the government to prop the firm up can be summed up in three words: It’s about time! Business failure is not only a permissible outcome of capitalism, it’s a necessary one. As the great economist Joseph Schumpeter has written, the process of “creative destruction” is essential for the market to function. For innovation to flourish and the standard of living of the populace to improve, the market must be free to reward success and punish failure.

There’s more, all good stuff as you’d expect from John. My take on this is that we are seeing the long-needed collapse of the hybrid model of “capitalism for profits, socialism for losses” that has helped get us into this mess. The problem is, of course, that we are likely to end up with socialism for profits instead of capitalism for losses. Free-marketeers need to rally to prevent that happening. Sharpish.

Meanwhile, you might also want to read John’s detailed examination of Sarah Palin’s supposed gaffe over Fannie Mae.