How long did the recovery take? PWC recovered those assets now, rather than then. In the mean time there was a huge reflation of the stock and housing markets, powered by the Federal Reserve in the short term and a return of confidence in the medium term.<p>You can&#x27;t treat mass psychology as an externality. Austerian policies rely in part on disciplining debtors to restore confidence in market transparency and the rule of law. If thousands of households lost their homes when their cash flow could not meet their debt payments, why shouldn&#x27;t a bank go bankrupt when its cash flow cannot meet its debt payments? Lehman was just the bank that couldn&#x27;t find a seat when the music stopped, and that&#x27;s fair.