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You're probably right - if they'd just been allowed to collapse we'd be in serious trouble. However we're still in serious trouble because of the moral hazard
by rbarooah 16y ago
You're probably right - if they'd just been allowed to collapse we'd be in serious trouble.
However we're still in serious trouble because of the moral hazard created. Banks have been given the greenlight to take similar risks again because they know they'll be bailed out in future.
Frankly, without also taking steps to force banks back into smaller entities that we can afford to let fail, all we've done is compound the problem and delay it until later when it will be worse.
- billybob 16y agoIs it better to force banks into smaller entities, exerting government control over the marketplace, or let their investors lose their pants when the banks take stupid risks, allowing the marketplace to correct itself?
- rbarooah 16y agoWell personally, I'd prefer the latter, but if it really was going to crash the economy completely, then the former might be necessary. But the only point in forcing them into smaller entities would be so that in future they would be allowed to fail.