Looking on bright side of carnage on Wall St

One of life's rules is that there's bad in good and good in bad. The total collapse of the US financial system is no exception. Even in the midst of the current financial despair, we can look around and identify many collateral benefits.

A lot of attractive office space seems to be opening up in midtown Manhattan, for instance, and the US government is now getting paid to borrow money. (And with Treasury bills
yielding 0%, they really ought to borrow a lot more of it, and quickly.)

And so, as Morgan Stanley chief executive John Mack blasts short sellers for his problems, and Goldman Sachs boss Lloyd Blankfein swans around pretending to be above this little panic, we ought to step back and enjoy the positives:

We finally get to see what's inside these big Wall Street firms.

We've just witnessed the largest bankruptcy in US history, and we know neither the inciting incident (though there is speculation that sovereign wealth funds decided to stop lending to Lehman Brothers) nor the deep cause. But there's now a pile of assets and liabilities smouldering in New York awaiting inspection.

The assets include subprime mortgage-backed bonds and no doubt many other things that aren't worth as much as Lehman hoped they might be. But it's the liabilities that are most intriguing, as they include more than $700 billion in notional derivatives contracts. Some of that is insurance sold by Lehman, against the risk of other companies defaulting.

The entire pile may be benign, but somehow I doubt it. We may well find out that Lehman Brothers, in liquidation, has a negative value of hundreds of billions of dollars. In that case the natural question will be: how much better could things be inside Morgan Stanley and Goldman Sachs, both of which were engaged in the same lines of business?

We are creating the financial leaders of tomorrow.

Remember when everyone believed in Alan Greenspan? When John McCain, running for President in 2000, said that if Greenspan died, he'd have him stuffed and propped up against the wall at the Federal Reserve, where he'd remain chairman? No sooner did Greenspan shuffle off the stage and sell his memoir than the financial system he helped shape fell apart. He's left not only a mess but also a void.

No matter how well-educated we become in our financial affairs, we still need public officials to look up to, unthinkingly. And there's nothing like a government bailout to create new public-sector heroes.

Treasury Secretary Hank Paulson, 62, is probably too old; in any case, he's tarred by his association with both George Bush and Goldman Sachs.

But 47-year-old Tim Geithner at the New York Fed is perfectly positioned to make Americans feel as if their financial system is in good hands for many years to come. I have no real idea if Geithner knows what he's doing, and he may not either. ("Bail out that one. No! Not that one — the other one!") It doesn't matter.

He's in the middle of great events and should, by the end of them, know more about what happened than anyone. Whatever happens to the US financial system someone is bound to get the credit for something even worse not happening and, as no one really understands what Geithner does, he's the obvious choice.