Every time Dick Fuld's publicists succeed in getting a "redemption story" published in the Wall Street Journal or New York Times, I'm going to write an Epsilon Theory brief about Repo 105, the fraudulent scheme that Lehman Brothers ran for years to hide its deteriorating financial condition from investors and regulators alike.
Here's what makes the world go round: you can borrow more money than you have in liquid assets.
That's what a mortgage or an auto loan or a college loan is. You don't have enough cash to buy that house or car or college tuition all at once, so the bank gives you the cash to make the purchase. But by the same token, banks are by necessity lending out more cash than they actually have deposited with them. This is both the gasoline and the oil for the modern economic engine, and if you and I didn't go into debt and the banks didn't lend more than they have in deposits, the engine would seize up and our entire economy would come to a screeching halt. This is, in fact, what causes Depressions.