Wednesday, November 24, 2010

Regarding national and private bankruptcies

 Ultimately bankers have to take responsibility for making bad loans, not just the borrowers. In national laws, there are rules for bankruptcy, and these rules are in the national interest because it does no good to throw people into debtor's prison, that simply deflates the economy and causes more debts to go bad. A wealthy nation keeps all its people employed as gainfully as possible. That was Adam Smith's real idea which seems to have been lost in the fog created by the very wealthy bankers and merchants he decried.
Furthermore, why should sovereign governments take responsibility for bad private debts? And why should sovereign debts run up by crooks and scoundrels in the government be passed through to the people, who may have had no clue, or may have been mislead by glowing opeds by famous columnists (Tom Friedman, for example). Speaking of which, those pumpers of neoliberal dogma bear as much responsibility as anyone.

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