It is a quieter, less fearful Monday morning than a year ago.  Lehman’s demise, so shocking at the time, proved to be a turning point that changed the perceptions of investors and politicians.  There are endless debates about whether the venerable firm should have been allowed to fail or not, but its bankruptcy and the other events that week seemed to indicate at the time that the business of money had changed  for good.  That Monday, I wrote about things that were “symptomatic of the age” that seemed officially kaput.the research puzzle | The car crash line must have been good, since the New York Times picked it up.

Now we are back to wondering how much really has changed.  There are signs of progress and “selling optimism” is back in vogue (now that having optimism has worked for a few months running).  “Luxury goods are selling again,” said a headline yesterday, and some very-high-paying trading jobs are now “easy to get,” according to a story today.  The stock market has trampolined and credit restrictions continue to ease bit by bit.  Despite some very real economic strains, a semblance of normalcy has returned.

That’s a problem in one respect, according to the financial historian, Niall Ferguson:

We could have another Lehman Monday.  The system is essentially unchanged, except that post-Lehman, the survivors have “too big to fail” tattooed on their chests.Bloomberg | Ferguson is the author of the 2008 book The Ascent of Money.

Over the tattoos, some are even back to wearing their Superman costumes.

After going through the wringer, one would think that we had made more progress in the quest “to reduce the socially harmful effects of finance while keeping its benefits.”Financial Times | The quote comes from this article on the Tobin tax. For all of the tumult, that has not happened yet.

Which leaves us essentially where we were and where we will always be.  As I wrote earlier this year,the research puzzle | I wrote an eight-part series on misplaced incentives in the market ecosystem, an index of which is found here.  The chapter called “one hand clapping” placed the great share of the blame for our troubles on the “buy side.” the theoretical and actual responsibility for markets working as they should lies with the investment professionals that are the outlet for the fare of the day.  Whatever they “demand” gets provided in the end, and the makers of the products will see that they are given more than enough of it.

Investors are, as always, in a process of price discovery, and the judicious taking of risk in search of return is what the business is all about.  As a byproduct of the choices that we make, the systemic risk of the market is formed brick by brick, although it can, has, and will be altered by government actions as well.  One year after that incredible September Monday, “too big to fail” is still with us.  We have seen that both profits and losses can result from that foundation, and now must get back to the work of deciding how our conceptual models (and the spreadsheets that attempt to mimic them) should value the market structure for today and tomorrow.