Tuesday, March 14, 2023


Well, I think people, people have stopped asking me what's a bailout ? You know, I keep giving them the wrong answer. Yeah, it's a bailout and bailouts are good. Bailouts are almost always the right thing to do. A bailout just means that the state steps in and provides insurance so that something economically destructive doesn't happen. And lots of people who did economics degrees start talking about moral hazard, but I noticed that there's very few people who work in the insurance business whose first concern right now is about moral hazard. I also very much doubt that anyone involved with Silicon Valley Bank, even those that are getting paid back at a hundred cents in the dollar, will look back at this last week and regard it as a case of moral hazard where they got looked after really well. In a crisis, you just need someone to stand in and show that they are managing it. And there's a lot of, to my mind, really quite silly rhetoric about bailouts because when it happens, it's kind of easy to do a political speech about how you are against bailouts and how you are in favor of saving money for the taxpayer, but it doesn't actually solve anything.

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