Blogging on the Bailout
I would blog on the most recent bank bailout, but I don't really understand what the proposal is. The administration apparently wants to take $700 billion and ... do something with it. Frankly, I would prefer them to just let the banks totter over and spend the money, if they really feel it necessary, to clean debris up afterward, as they did with the RTC in the 1980s. At least that way we would avoid the moral hazard and know the money was going to cleaning up the worst messes. My guess is that $700 billion pseudo-randomly injected into whatever companies can cry the loudest at the treasury's door is not only creating bad incentives, but is probably going to waste at least half of the money.
