ANOTHER TOP HAYEKIAN MACROECONOMIST WEIGHS IN —
Posted by PrestoPundit on 09/19/2008
U. of Missouri professor Lawrence White:
this could turn into the wrong kind of rescue — a bailout
of stockholders as well as the market, in effect rescuing the financial
industry from the consequences of its own greed.
I’d say that the probability is 100% that it will turn into the
wrong kind of rescue. There is no immaculate conception for bailout
legislation. There is no non-distorting rescue when the costs are being
externalized to taxpayers.
On greed, let me repeat: If unusually many airplanes crash
during a given week, do you blame gravity? No. Greed, like gravity, is
a constant. It can’t explain why the number of crashes is higher than
usual. And let me add: This isn’t a morality play. What we’re
seeing are the consequences of monetary-policy distortions of interest
rates and regulatory distortions of incentives, amplified in some
degree by private imprudence, not the consequences of blackheartedness.