Holman Jenkins Jr.

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dives under the hare hole now in one op-ed suggesting that the near collapse that the banking industry proves no that the financial device needs fixing, yet that it"s working exactly as planned.

Under this weird revisionism, "moral hazard" is simply the price of act business. Only Utopian long-hairs fret around "too huge to fail," while TARP is transforming into one hell of an investment. And contrary to popular opinion, many of the nation"s largest financial institutions were never really in problem at every -- human being just panicked. Jenkins writes:

We"re no saying banks didn"t make negative loans.... However neither were financial institutions destined to shed fatal amounts of money by holding these assets till maturity granted the stabilizing duty of a lender of last resort to make sure a liquidity panic didn"t metastasize right into an economy-wide solvency meltdown ....

In a panic, remember, the problem isn"t really financial institution size or interconnectedness -- it"s behavior, a fear that the public is one headline away from trying to yank its money the end of the jae won system.

What eliminated Lehman Brothers? Panic. How about Washington Mutual and IndyMac? Panic. Colonial Bank, Guaranty Bank? Panic, panic. Oh, and how around the living dead, prefer AIG (AIG) and Citigroup (C)? Breathe, people, breathe!

Jenkins claims none the these carriers were ever in major danger. And that"s since of the "stabilizing duty of a lender of last resort," otherwise well-known as you and me. As long as Uncle Sam, the patron saint the perpetual handouts, is there to stabilize wall surface Street v his checkbook, it"s every good.

Insurance facilitates risk-taking -- that"s its job. And also governments for 2 centuries have actually deemed it ideal to write the financial device a liquidity insurance plan in time of panic. This won"t change, at least until the Rapture descends to cure the inherent dangers of fractional make reservation banking.Am i feverish, or is Jenkins implying that federal government bailouts the the financial market are installed in the herbal order of things? however never mind the -- simply follow the lady, since he"s getting approximately to identify the actual culprit:It"s the crisis everywhere that the welfare state, of guarantees made the are beyond the power of governments to keep -- start perhaps v sad sacks like Greece yet ending v Japan and also the U.S., which remain central to the an international economy.Ah, the welfare state. Scourge of bumptious individualists everywhere. Thumbscrew to the Invisible Hand. Predictably, that"s Jenkins"s actual target. And also to do his case it"s essential to transform the financial meltdown into a an unfavorable of itself, to turn black into white.

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In this picture, bailouts aren"t a problem, they"re a permanent solution sanctioned by God and country. Dangerous bubbles aren"t dangerous, they"re a safety belt. The opponent isn"t interlocking banks, yet depositors susceptible to losing their nerve. The welfare state didn"t save wall Street from itself, however from -- here"s a neat cheat -- the state itself. ~ above the various other side that the looking-glass, situation is stability.