If Lehman fails, would you feel it?

As frightening a thought as that is to financial market players, many also confess to having an intense curiosity about the potential outcomes: What would happen to the financial system? How bad would the fallout be?

Or would we find out that our worst fears were greatly exaggerated?

There also is a sense that a spectacular failure may be the cathartic event that is needed to move the nation's credit crisis closer to its final chapter.

"You get to a point where the dike is going to go no matter what," said Jeffrey Gundlach, chief investment officer at $127-billion-asset TCW Group, the Los Angeles parent of Trust Co. of the West.

Since at least the 1970s, however, the public has come to assume that some financial institutions were simply too big to fail. That view was underpinned by government policy that has been evident in spades this year.

In March, of course, the Federal Reserve stepped in with $30 billion to grease the sale of crumbling brokerage Bear Stearns Cos. to JPMorgan Chase & Co. And just last weekend the Treasury committed up to $200 billion of taxpayers' funds to guarantee the survival of mortgage giants Fannie Mae and Freddie Mac.

Now the government has said, no more. The Treasury and the Fed are said to be refusing to provide aid to potential buyers of loss-ridden Lehman, whose stock plummeted 77% this week as investors fled.

If this weekend the 158-year-old firm can't find a way to survive on its own and can't find a buyer, its collapse could be imminent.

Many Americans' sentiment on this is evident in the comments that deluge almost any investment website: "Let it fail!"

Lehman has been crippled by huge risks it took in the mortgage market. If foreclosure is the certain fate of millions of strapped homeowners, why should Lehman be spared?

The perennial argument for government aid is that the messy demise of Lehman could ravage the global financial system. Like mega-rivals Goldman Sachs Group, Merrill Lynch & Co. and Morgan Stanley, the firm is engaged in countless transactions, as a lender or borrower, with other brokerages and banks worldwide.

If Lehman can't make good on some portion of its hundreds of billions of dollars in commitments, there is a risk of a domino effect throughout the financial system. And all of us, one way or another, are dependent on that system.