The Never-ending Banking Crisis

By Arnold Kling

Simon Johnson writes,

Boris Fyodorov, the late Russian Minister of Finance who struggled for many years against corruption and the abuse of authority, could be blunt.  Confusion helps the powerful, he argued.  When there are complicated government bailout schemes, multiple exchange rates, or high inflation, it is very hard to keep track of market prices and to protect the value of firms.  The result, if taken to an extreme, is looting: the collapse of banks, industrial firms, and other entities because the insiders take the money (or other valuables) and run.

This is the prospect now faced by the United States.

Read the whole thing.  I think it is one of the best blog posts ever.


This article available online at:

http://www.theatlantic.com/business/archive/2009/03/the-never-ending-banking-crisis/1243/