In a suit against the former executives and directors of Lehman Brothers, the State of New Jersey asserts that “fraud and misrepresentation had caused the state’s public pension fund to lose $118 million”: “The suit … contends that a “thirst for profit” and “simple greed” by the Lehman executives … caused the firm to misstate its financial position when the state bought $182 million of Lehman shares in April and June 2008.”

But in fact the “thirst for profit” and “simple greed” were on the part of the State of New Jersey. Its investments in Lehman shares were made a couple months after Bear Stearns was bailed out by the Federal Reserve and JP Morgan. The State of New Jersey should have known better. But I suppose that’s how public investment works: If the gamble works, you’re a genius. If it doesn’t, you were duped. People, especially public officials who have the duty of investing for their constituents, should take responsibility for their own actions.

Why do you think Lehman shares were so cheap? Because the general sentiment was right: that they were going down.