Scott Garrett on Government Bailout of the Banking Industry

Well, apart from the fact that I’m not exactly a huge fan of Glenn Beck…interesting clip. Don’t really think there was any great alternative in the Northern Rock quagmire – well, there obviously was: the one that should have happened (i.e. ‘not the government’s problem’). But then again, this really is one of those issues where you have to take a hard look at the facts and ask yourself whether you’re really willing to accept the dire consequences that would undoubtedly have happened if the government’s around the world had done ‘the right thing’ – recession, and a pretty bad one at that (in the Northern Rock case there would have been a bit of a bigger bank run, too – and it might have happened to other banks).

So yeah, in the short run – swallow the additional inflation and accept what has to be done. Doesn’t mean I like it one bit and it certainly does not make that whole fiscal stimulus idea any better – that’s still a crappy idea and won’t do any good. In the long run – it’s probably just about time for some pretty big reforms.

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