Posted by
Compassionate Conservative on Wednesday, April 29, 2009 9:21:16 PM
In my latest letter to the P-N editor, I have to take Fauxconomist Paul Krugman to task again. In Krugman’s latest effort to sell Americans on socialism, he writes that banks are now all “a ward of the state…every bit as dependent on government aid as recipients of [welfare].” Therefore, he concludes, there is a new reality where bankers can no longer receive bonuses as “a reward for their creativity” and that bankers need to accept this new reality, in which banks will be run like public utilities.
But Paul, whose idea was it to give hundreds of billions of dollars to failed bankers in the first place? It was you and your liberal buddies who did that, and now you want us to believe that having made major banks “ward[s] of the state,” it’s only fair that you liberals want to take them over and run them. That's some not-too-brilliant circular logic. I’ll admit that these bankers made a lot of mistakes, but if you want to see a badly run financial system, replace them with government bureaucrats and see what happens.
At least before the big bank bailout, bankers had some accountability for their failures; government bureaucrats have no such accountability. We don’t need to be nationalizing our banks. We need to stop the bailouts and let the failed banks expire, to be replaced by well-run banks. There will be some short-term pain, but in the long term the system will be much better off. As a real economist, Alan Meltzer, has said: “Capitalism without failure is like religion without sin – it just doesn’t work.”