Sunday, January 04, 2009

Pushing On A String

One can certainly take issue with the bailout and the subsequent behavior by banks and other entities which are stealing all our money, but too many people seem to miss or gloss over the simple idea that maybe banks aren't lending money because it'd be pretty stupid to lend money right now. What are they supposed to lend it for? Commercial real estate development? Jumbo mortgage loans as home prices fall? Car loans when unemployment is rising? Industrial development when capacity usage is declining?

The bailout was a bad idea because they wrote idiots a $700 billion blank check. I know people always think in crises doing something is better than nothing, and for all I know this was the case here, too, but the people in charge have all along failed to understand what was going wrong.