After the Fed and the Treasury had allowed Lehman to fail, America’s elected representatives had refused to back their own government’s emergency rescue effort. The reaction in the markets was one of terror. The Dow Jones index plummeted by 778 points, wiping $1.2 trillion off the value of American businesses in a matter of hours. It was the biggest loss on record, worse than on 9/11, when the index had plunged by 684 points.60 The shock to global confidence was devastating. It produced a terrifying synchronization of the crisis on both sides of the Atlantic.
