Wednesday, September 24, 2008

Views on the Bailout: Part 1

Just to get it out of the way, I know pretty much nothing about the proposed bailout. I've read about it in the newspaper and heard people talking about it online, but my understanding of what's really going on is as superficial as Paris Hilton. But of course this is America and mere ignorance will not stop me from voicing my opinions, or, more accurately, repeating the opinions of smarter people.

The first opinion piece that I enjoyed is from the Times (London, not NY). It essentially argues that free-market concern about the bailout is misplaced. It's a well-written piece by someone who knows vastly more about the whole mess than I do and it is full of very British humour:

As Charles Goodhart said in the FT this week, the time to worry about moral hazard is in the boom. Worrying about moral hazard now is like “refusing to sell fire insurance just after the Great Fire of London for fear of adversely affecting future behaviour”.

I can't help but wonder, though, if it does not unfairly simplify some of the concerns that people have about the bailout. Moral hazard is surely one of the boogymen that has been invoked, but I suspect their are other legitimate worries. In any case, it is worth reading and will make for good conversation over the proverbial dinner table or water cooler.

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