Monday, January 19, 2009
"The only reality-based solution to dealing with bankrupt, insolvent institutions is to let them fail and let them file for bankruptcy protection. Once this has happened their debt is largely discharged. To not do so, or as Ben Bernanke’s plan would have it, to give all of these insolvent institutions billions of dollars to keep them afloat, means that (1) a multi-trillion dollar deficit becomes the tax burden of future generations of Americans, (2) those who became rich on their own excesses are not held to account and retain their individual wealth while the majority of Americans struggle to get by, and (3) the speculators and gamblers who went into debt are released from any responsibility---they are free to find new ways to exploit the system, and they know that if, in the near future, they run up bad debts again, relief awaits in the form of help from the government. Hence there is no deterrent to this type of behavior. And so Ben Bernanke’s plan, at best, creates an enormous tax burden for future generations of Americans while simultaneously doing nothing to deter would-be speculators and Ponzi-schemers from plying their trade time and time again. In other words, the Bernanke and Obama plans are not solutions, they are obfuscations. They do nothing to change the system that has brought us to this point."
(One of my favourite sites.)