In Praise of Bankruptcy

[The_Orlonater]

An excellent article.

http://mises.org/story/3154

 

[heavenlyboy34]

I agree-a great piece. ~bumpity bump~

 

[The_Orlonater]

Bump for justice.

 

[Otter Mii-kun]

excellent!

Excellent piece effectively debunking conventional wisdom that the wave of bankruptcies is "terrible" for the economy and that lack of intervention to prevent bankruptcies will "make things worse".
The mainstream media and establishment politicians harp on about how bankruptcy of any "major" company is doom-and-gloom and tell us that government intervention to "stop these bankruptcies" is the only way to prevent "disastrous consequences". They also tell us that every failing company must be propped up at any cost and that the economic boom party must go on forever and never be allowed to stop or even slow down-even if it means uncontrollable inflation.

The present financial problems would disappear quickly if the government let the markets operate and let inefficient firms go bankrupt. The irony is that the government is stepping in to solve the problems it created. The solution might "work," but the underlying disincentives in the mortgage and insurance markets will persist. Increased government meddling in the financial markets will only make the financial problems linger.

The mainstream media and establishment politicians tell us over and over that things will be "much worse", even "terminal" if the government doesn't intervene.
Bailing out these Wall Street firms, as we're told, is "the only way out" and that what's good for Wall Street is always good for the rest of America-even if it means massive inflation.

 

[cheapseats]

An excellent article.

http://mises.org/story/3154

...Bankruptcy is a normal part of economic life, covered by laws that guarantee stockholders will be compensated as much as possible...

There are a number of stockholders who are apt to disagree.

Banks and insurance firms are careful when lending or selling policies because they want to ensure their revenue will pay their bills.

Bullshit.

Government involvement, however, provides a cushion for failure and allows banks and insurance firms to be careless.

That is why banks and insurance firms are NOT careful when lending or selling policies because Someone Else ensures that their revenue will pay their bills.

 

[The_Orlonater]

There are a number of stockholders who are apt to disagree..

Maybe, but post a link.

Bullshit..

Bullshit? How the hell is that bullshit? Banks need to make money, and bills are what they have to pay.

That is why banks and insurance firms are NOT careful when lending or selling policies because Someone Else ensures that their revenue will pay their bills.

Well, now. Surely not under a free market.