Saturday, 7 March 2009

Let them fail

Earlier I argue that troubled auto makers should be allowed to go bankrupt. Now I see that Russell Roberts at Cafe Hayek is also arguing that troubled companies should be allowed to fail. He writes
We're going to run out of money.

We can't keep GM and AIG and Fannie and Freddie and every insolvent bank and every mortgage afloat. It can't be done. It's not a strategy. It's just desperation to avoid pain.

We're going to have to start letting them fail.

Sooner is better than later. Otherwise, we continue to throw good money after bad.

Let them fail.

When you're in a hole, the first lesson is to stop digging. Let's start by putting down the shovel and admitting we are heading in the wrong direction.

Let's taste some bankruptcy. Let's let some resources and capital get out of the hands of the people who are misusing it and into the hands of people who can use it more productively, wisely, and prudently.
Well said that man.

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