Bailouts: When Will They End?
I’ve been against bail-outs from the beginning. So should have all economists. It’s reasonable to debate the merits of contracyclical monetary policy. It’s not reasonable to debate the merits of rewarding failure on a grand scale.
Alas, in “practical politics” almost no one’s interested in figuring out whether we took the wrong course two years ago. Instead, it’s all about the latest crisis – and the next crisis on the horizon. It really does seem like the crises just keep getting bigger: Wall St., Greece, then what? Italy?
My point: One bailout seems to lead to another, but bailouts have to stop eventually. What begins as “too big to fail” eventually becomes “too big to save.” So here’s my question: Where will the line be drawn? Who’s going to be in the water when the “sink or swim” verdict finally comes in?