Browse through the finance section of any newspaper today, and the theme of the moment - The Eurozone debt crisis - is all you will see. Are we in for another Lehman moment, is the question everywhere. If the answer to this question turns out to be affirmative, then unfortunately the recession we are about to witness would be more prolonged and intensive than the one in 2008, simply because the room for fiscal and monetary stimulus is much limited than it had been in past. And the best course in the current scenario to prevent another recession is by pre-empting another Lehman moment.

Though Lehman was not a commercial bank with retail deposits, it was tied too close with commercial banks through derivative transactions; and the uncertainty as to how these banks would be affected by Lehman's failure drove away from the market the money market mutual funds (MMMFs) on whom the commercial banks were heavily dependent for short-term funds. The lack of confidence resulted in drying up of liquidity and losses on mortgage-backed securities proved to be detrimental for the banks all over. So, the real question is, are we in for something similar?

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