Re: Removing the Doughnut (Christopher Hayes & Brink Lindsey)
What's wrong with insolvency as a policy choice? Chris thinks it has huge transaction costs, but current cycle of boom followed by federal protection of the most irresponsible is tremendously demoralizing. Check the recent figures on performance of the FHA loan portfolio if you are in any doubts as to the continuity of this general policy. Whether by some programmed degree of inflation or via direct bailouts of debtors, the message pounded home is the same: there is no protection coming from the government - everything done in our name is going to more directly aid an interest that has carefully bought influence through the years. This current administration is in some ways more bought off than the previous one. The previous one at least had some excuse of acting in a crisis. Okay, many of their actions brought on that crisis, which was pumped up outrageously by Paulson, Bernanke and Geithner, but still throwing money at it in September 2008 is somehow a little easier to swallow than nominating Geithner, re-nominating Bernanke, and continuing to cut checks for AIG to flow straight on to Goldman and Deutsche.