Advertisements Walter feels guilty simply because he knows that what he did (saving Peter) caused someone else to lose their child. The same feeling Walter had causing him to go to such great lengths. Walter is a supremely emotional person and it hurts him so to know that he's the cause all the issues. Add to that, he starts thinking that the Observer is trying to "right" the wrong that Walter has caused, thus killing Peter, it causes Walter to lose it. Walter's redemption is that even though believing Peter was going to die, he was willing to "give him up" to right the wrongs of the past.