“We have this very strange situation today in America where we have given banks hundreds of billions of dollars and the president has to beg the banks to lend and they refuse. What we did was the wrong thing. It has weakened the economy and has increased our deficit, making it more difficult for the future.” -- Joseph Stiglitz
Any time Joseph Stiglitz calls out the government on their bad decision making, its worth reading:
“Nobel Prize-winning economist Joseph Stiglitz said the world’s biggest economy is suffering because of the U.S. government’s failure to nationalize banks during the financial crisis.“If we had done the right thing, we would be able to have more influence over the banks,” Stiglitz told reporters at an economic conference in Shanghai Oct 31. “They would be lending and the economy would be stronger.”Stiglitz has stuck with his view even after the U.S. economy returned to growth in the third quarter and as banks’ share prices climbed this year…The U.S. government plans to alter the way that a similar rescue would be handled in the future. Draft legislation proposes that banks, hedge funds and other financial firms holding more than $10 billion in assets would pay to rescue companies whose collapse would shake the financial system.”
Why are we constantly governed by fools?
What I've said is that there is more than one route to get to the same destination, some of which are faster than others. Nationalization would have, I believe, led to a faster recovery. But even if that's not the case, even if the recovery would have gone at the same speed (I don't think it would have been slower), nationalization would have also allowed us to reach the same outcome with a different distribution of the bailout money, a distribution that would have been at least somewhat more acceptable to the public because it wouldn't have required giving so much of the bailout money to those who caused the problems.