It is a shame that the ethics and practicalities of debt and default are so little discussed in a serious way. The actual mechanics of bankruptcy, be they corporate or sovereign, are poorly understood by all save a few. Hence decisions of vast import are mostly made by ill-prepared politicians, civil servants and central bankers after negligible debate; and dazed citizens are forced to deal with the terrifying consequences.

It is worth examining three particular choices about financial failures made by our leaders in the past couple of years: two were catastrophic; one appears to have been excellent.

The first mistake was not saving Lehman Brothers. The bank’s collapse set off a chain of events across the world’s financial system that almost brought down the entire structure. The cost of bailing out Lehman – while wiping out shareholders and some categories of creditors – would have been modest compared with the losses. But the business was obliged to shut instantly, never to reopen, and the destruction of value and damage to confidence worldwide was enormous. More or less all stakeholders lost everything, with a few exceptions.