So the consequence of making absurd investment decisions in real estate is that, if you are a banker, the government spends $$ trillions to bail you out. Bernanke Reiterates Need to Act Quickly, Clarifies Comments on Valuing Assets [WSJ.com]. Worse, the Bush Administration is advocating immediate passage and unreviewable discretion in what the Treasury Department does with all that money. As I see it, since depositors are insured, who cares how many banks fail due to poor real estate investment decisions? That’s why we call it a market economy. If the risk of failure does not exist, there will be absolutely nothing enforcing financial discipline on the bankiong sector in the future. That’s bad for the economy and bad for consumers. We should let the subprime bankers twist slowly in the wind for awhile. Enough with the bailouts already!
