The conventional wisdom is settling in: It’s awful, and terribly un-conservative, to nationalize a big lump of the financial industry, but the alternative is too awful to contemplate.
Baloney. It may be politically too awful to contemplate, i.e. hazardous to the well-being of our political class, but that’s the kind of short-termism that got us here. Once this thing is done, it’s done, and the dollar is a few inches closer to being a Soviet rouble. The conviction that government will always bail out a financial catastrophe will be factored into all future trading and financing decisions. Down the road – in the time of our children and grandchildren – this will have consequences far worse than a 5-year deep recession.
Sure, I have money in the markets – way less than I had this time last year. I have kids, too, though. Let’s think this through.
Fiat justitia ruat caelum. Or as the immortal Calvin Coolidge said (when asked about forgiveness of the WW1 debts racked up by European nations): “They hired the money, didn’t they?”