Libertarian Alliance: No to Bail out for UK Financial System


As ever, the Libertarian Alliance provides the radical case:

Final responsibility for this crisis rests with the authorities. For at least ten years, the Bank of England – and the central banks in most other countries – has kept interest rates below the market equilibrium. The result has been an orgy of credit creation by the commercial banks. This led to an asset price bubble that has now burst.

Governments can stand back and let weak institutions fail. This will bring on the worst financial collapse since 1931, and be followed by a nasty recession. Or they can spray vast amounts of our tax money into the financial markets, which might briefly delay the worst financial collapse since 1931 and a nasty recession to follow.

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