What People Still Don’t Get About Bailouts
It doesn’t seem fair, does it? Just 15 years after our financial overlords went on a bailout binge, showering bankers with trillions of taxpayer dollars, they’re once again riding to the rescue of the rich while the public watches in horror. Did they learn none of the lessons from the 2008 meltdown?
Actually, yes, they did. The government’s financial-crisis managers clearly studied the lessons of 2008, which is one reason the collapse of Silicon Valley Bank a week ago doesn’t seem to have created another cataclysm, at least so far. It’s the public that’s never understood those lessons, which is one reason the public is likely to draw the wrong conclusions about the SVB mess too. And the most important lesson is the hardest to understand: Good financial-crisis management isn’t supposed to seem fair.
That’s because managing a financial crisis, as the overlords of 2008 explained in a I helped them write, is like fighting a dangerous fire. Good firefighters don’t worry whether the burning building was up to code, or whether someone smoked in. They don’t ask themselves if maybe some of the bozos inside deserve to burn. They focus on putting out the flames, because fires can spread, and out-of-control infernos can be disasters for everyone.
