Thursday 16 October 2008

 

The latest culture as recommended by our staff

Michael Henderson

Michael Henderson suggests


Don't worry, we'll bail you out

Tuesday, 18th September 2007

Your email address:   
Friend's email address:   
   

I was about to publish a post pointing out the message of Alistair Darling's guarantee to Northen Rock last night: that if you run a bank irresponsibly, it doesn't matter because the government will bail you out.

But Daniel Finkelstein got there first:

Guaranteeing deposits at Northern Rock and offering to do the same for other institutions may prevent meltdown, but there is a large moral hazard cost. Banks now know that they don't pay the full penalty if they find themselves at risk of running out of cash.

It will be interesting to see how long the Government's extraordinary guarantee lasts for. Too short and it won't work. Too long and the moral hazard cost becomes almost unbearable.

   Previous Back to Stephen Pollard   Next 

Blogs: Clive Davis | Melanie Phillips | Americano | Coffee House | Trading Floor

Actions: Print this article  |  Email to a friend  |  Permalink  |   Comments (1)

Subscribe now

Post this entry to:   del.icio.us | Digg | Newsvine | NowPublic | Reddit

Comments

Post a comment


Your comment:*

Your name:*

Your email address:*
(We won't publish this)

*Required information

Please click the button only once - your comment will not be published immediately

Lee Jakeman

September 18th, 2007 10:15am

It always was the best bank of them all - the national income. If we can't pay it, there's always our children ...

The Spectator Parliamentarian Awards
The Spectator Billabong

Stephen Pollard's Blog Roll

Oliver Kamm
Politics, economics and culture from the master. Unmissable.

Daniel Finkelstein's Times Comment Central
A daily must-read. 

Tim Worstall 
Lots of interesting nibbles - and a ruthless swatter of economic gibberish.

Marginal Revolution
Tyler Cowen's riveting economic blog.

Harry's Place
Must-read left of centre blog from writers who understand the threat to the West. 

Thought Experiments
The peerless Bryan Appleyard's blog.

Opera Chic
An American in Milan, on opera.

Intermezzo
A London-based classical music enthusiast.

Jessica Duchen's classical music blog
Does what it says on the tin.

Samizdata
Libertarian blog, packed every day.

Norm's blog
The thoroughly sensible thoughts of renowned left-wing academic Norman Geras, Professor of Government at Manchester. And cricket, too.

Public Interest
Peter Briffa's inimitable take on The Yazzmonster and other assorted demons.

Reform
The public sector reform group; their website is an invaluable source of data and ideas.

Centre for the New Europe
The leading European public policy think tank.

Spectator recommends

Nissan Family Cars - Book a Test Drive Online

Take advantage of unbeatable Nissan value. Book a test drive today.


Spectator classifieds

ROME CENTRE

PORTA METRONIA, ROME Standing high on the top of one of the seven hills of Rome- the Coelian- this unique

City Breaks. ROME and PARIS

ROME and PARIS: over 350 holiday rentals apartments listed: visit  www.romanreference.com  and  www.parisreference.com or call +39 0648 903612.

Jewellery. RUFFS (Estd. 1904).

Goldsmiths by Design Welcome to Ruffs!  You have found a company of Goldsmiths that specialises in the manufacture, amongst other