Wednesday, September 24, 2008


Alex Tabarrok:

"Banks are bridges between savers and investors. Some of these bridges have collapsed. But altogether too much attention is being placed on fixing the collapsed bridges. Instead we should be thinking about how to route more savings across the bridges that have not collapsed. Government lending may be one way of doing this but why lend to prop up the broken bridges? Instead, why not lend directly to the investors who are in need of funds? After all, if these investors exist and have valuable projects that's where the money is! Let the broken bridges collapse, taking the shoddy builders with them. Instead focus on the finding and rescuing the victims of any credit crunch, the investors who need funds."

In either case, David Leonhardt implores readers in NYT not get bogged down in distractions, such as changing bankruptcy laws and limiting executive pay and realize the crisis demands a "laser focus" to stabilize first credit markets.

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