Russell Roberts has a long piece on what lead up to the financial crisis of 2008.
In the United States we like to believe we are a capitalist society based on individual responsibility. But we are what we do. Not what we say we are. Not what we wish to be. But what we do. And what we do is make it easy to gamble with other people’s money—particularly borrowed money—by making sure that almost everybody who makes bad loans gets his money back anyway. The financial crisis of 2008 was a natural result of these perverse incentives.
The bill that the Democrats are trying to push through the Senate won’t fix these perverse incentives. It creates a bail out fund. This will further distort the markets and reduce risk for the huge banks. That’s not capitalism. That is corporatism.
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