July 03, 2012

Allister Heath writes for The Telegraph

Good. This will give him a wider audience.

His first column proposes that we must inject some capitalism into banks.

He says banks need to be allowed to go bust. They need their own special bankruptcy code.

But it would still be worth the senior management's while to bet the bank on "investment banking" profits.

They could expect ministers beleaguered by worried small account holders to cave in and guarantee the bank. If - amazingly - ministers resisted the huge political pressure, the senior managers would shrug their shoulders and retire to enjoy their nesteggs.

Beguiling economics but unrealistic politics. This is more realistic.

No comments: