I have always said that the bail outs governments have given companies are erroneous, if not bordering on the immoral.
A statement made by International Monetary Fund Managing Director Dominique Strauss-Kahn confirms what I have been thinking and saying for a while now.
Sure we need banks to survive, but if they are inefficient they should be left to die. Some people may have to take some short term pain but if this is not done then all people will have to take long term pain.
Strauss-Kahn stated on Sunday that governments will have to have an exit strategy. When asked how this will be done by Der Spiegel, Strauss-Kahn said “a combination of higher interest rates and ending direct intervention of central banks would be needed.” http://www.reuters.com/article/newsOne/idUSTRE58B0K620090912
In the end who will suffer by the bank bail-outs? The consumer - we will be paying higher interest rates so that governments get their capital returned. By using the money to bail out banks denies government with money they could have used for health care, schools, roads and infrastructure. All these items will increase competitiveness of the country and provide much needed and improved human and social capital.
