It seems fitting that in the midst of the round-the-clock coverage of the one year anniversary of Lehman's collapse, the UK is in the midst of deciding whether or not to let one of its institutions fail. As much as lawmakers would like to make an example out of the Caymans and force them to fend for themselves, should the tax haven fail to find a way out of its budgetary abyss, the UK may find itself on the hook for far more than the £25bn its satellites cost the Queen through tax avoidance and evasion.
But it's not just the Caymans that are cause for concern. As proof that misery loves company, the Isle of Man, Guernsey, Gibraltar and the Turks & Caicos are all in one form of trouble or another. By now though you'd figure the lessons from Lehman had been learned and government officials would just bite the bullet and throw out the safety net in the name of overall global stability.
Vince Cable, the Liberal Democrat Treasury spokesman, said: "Britain obviously has some responsibility towards these small number of territories and that's clearly right, but we can't get into an open-ended bailout that would reward financial mismanagement.
Unless the UK plans on following Lehman's lead and putting its sunnier territories up for bid on eBay, an open-ended bailout seems preferable overall to a close-ended bankruptcy.
Britain 'may be forced to bail out tax havens' [Guardian.co.uk]