On the wisdom of bailouts

Quality snark here from Alex Tabarrok: Thanks goodness we bailed out Bear Stearns back in March if we hadn’t we might have lost Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch and who knows what else.  Oh wait… For what it’s worth, I think defenders of Treasury and the Fed’s moves over the past ...

Quality snark here from Alex Tabarrok:

Quality snark here from Alex Tabarrok:

Thanks goodness we bailed out Bear Stearns back in March if we hadn’t we might have lost Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch and who knows what else.  Oh wait…

For what it’s worth, I think defenders of Treasury and the Fed’s moves over the past few months would say that euthanizing Bear Stearns was the right move — letting it suddenly implode without federal support would have made the situation much worse — and it gave time for Lehman Brothers to die a slow, orderly death. Wall Street has had months to prepare for today, and that’s why Paulson felt he needed to draw a line here and now and say, "no mas."

With the markets howling, it’s easy to think he made a bad call, but that’s to be expected. Only time will tell if he was right.

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