jayjayjay1212

New Game, New Rules

The US government was caught up in a losing proposition, that is choosing between a potential financial collapse or taking on an insane amount of risky debt (with taxpayer money and without their consent) by bailing out the big banks that might cause ''systemic risk'' if they were allowed to fail.

No matter what the government did, it would have faced strong criticism. The problems is in the savage capitalism system advocated by Milton Friedman. Each firm has so much pressure to exceed profit estimates that OF COURSE they will take on more risk (CEOs also get bigger bonuses when the profits are record-breaking). Had Friedman gotten his way, there would probably be no government to bail out the Wall Street fat cats, and we'd be plunged in a fear-induced negative spiral that could lead to something as bad as the 1930s.

The assumptions behind the pure market theory (RATIONAL economic agents and PERFECT information, for example) are flawed, and let's hope the government realizes that and goes for a better capitalist system like the one they have in Scandinavia.

Now the government is forced to socialize all the losses to the common taxpayer.