Wednesday, October 26, 2011
The Great Bailout
At the first signs of weakness we beg for the FED or ECB or the government to do something big and fast. The European credit crisis seemed a final chance to put some capitalism back into capitalism. To allow dumb decisions to pay the price for failure. To reward the institutions that had properly navigated through the risks. There was even a brief moment when it looked like Germany would do that – would force those who failed to pay the price and support those who had taken the best steps. But now with Dexia bailed out and some super SIV on the way, it looks like we are once again heading down a path of not allowing failure – in fact we are once again rewarding failure and living beyond your means. It isn’t communism, but it certainly doesn’t fit any classic definition of capitalism.