Is the “lender of last resort” enough to change the expectations of the financial markets?
The recent rescue plan can be considered the solution of the current crisis or a different approach is needed also in terms of “real” economy in the long term
It would be a short term solution,what’s the point of investing the taxpayers money with no returns??what is going to be your budget for planned expenditure in terms of real economy?,If you keep bailing out it will just prolongate the illness as Drew Sygit has already mentioned about the things more to come.It would be better of allow the Free markets forces to play their roles which is “FREE ENTRY AND EXIT MARKET”.It would have served a lesson to all,but by bailing them out it sends out a wrong signal not only to companies but also to common man who will not mind taking another loan and defaulting on it.
My suggestion would be to let the markets play according to its will as they are the real forces of economy.Perfect Market is only in theory and you cannot achieve in practice.Instead start regulating your system so you don’t commit these mistakes,it was utter foolishness on the the part of lenders without ascertaining the creditworthiness, I just a heard a fact that all that one was required is self certification of his income,of the 100 application received 60 of them were Inflated Income.
Creation and Sustainability of wealth is one of the key aspects for the economy to keep running,so what the authorities should do is look into the future(the next 3 years) of how are we going to keep the economy running.Agreed the economy is going to slowdown for a couple of years but what after that???So there should be a different approach.