Throwing good money after bad
Even as the mirage of a private-sector bailout for the taxpayer billions thrown at Northern Rock fades, central banks are to throw far more taxpayers money at the commercial banks. That is, banks that threw their money into what is probably the world’s biggest ever bubble (USA, UK) in a classic race to the bottom, and are now terrified of the pyramid collapsing.
I’ve already commented on the demise of Prudence and expected inflation. Combine that with throwing unlimited public money in in panic, and we’re straight back to something like the 1970s. Or perhaps worse.
The best hope for avoiding much deeper trouble now is if the remaining banks can keep away from this money.