Thursday, January 15, 2009

Is the "Bailout" Working?

An interesting look
at the "Wall Street Bailout".

Who has benefited from all this? Every investor, every household and every business in the United States. You may not like the fact that, as a result of these actions, overpaid bankers were allowed to hang on to their jobs or preserve the value of their stock holdings. And you may be unhappy that the financial system remains in such fragile shape that it is still hard for some people and businesses to get loans they think they deserve. But let me assure you that things would have been a whole lot worse if these actions had not been taken.
There is plenty to dislike about the Treasury's bailout program, and no doubt there are lots of ways it can be improved, but it is simply unfair to call it a failure. Given the size of the credit bubble and the excessive leverage that banks were allowed to take on, there was no way to rescue the financial system without injecting new capital, shrinking loan portfolios and shielding bankers from the full consequences of their misjudgments. The standard by which it should be judged is not whether it is fair, which it is not, or whether it has magically prevented foreclosures and restored the normal flow of capital, which it could not, but whether it has sufficiently stabilized the financial system to allow for an orderly restructuring.

By that standard, it has been a qualified success.

1 comment:

The Intellectual Redneck said...

The Bail Out Game
There is is new web based game called the "Bail Out Game." It has you driving a truck load of money around a Monopoly like board while you make decisions about what companies to bail out. Economic events like stock market drops often occur. This would be hilarious if it didn't so closely resemble reality. You can play it here. Have fun while the money lasts