The Demise of Central Banking?
Martin Hutchinson has brought up some interesting points regarding the recent financial crisis’ suffered in Britain. Here’s a blurb from his editorial:
After pretending an unwonted firmness for a few weeks, the central banks in both Britain and the United States caved this week, accepting financial sector bailouts and in the Fed’s case lowering interest rates. Moral hazard has thus been made immoral certainty; financial market participants who indulge in grossly speculative activity can be “highly confident” (in the words of the old Drexel Burnham commitment letters) that they will be bailed out by the public sector, i.e. ultimately by the taxpayer. Rarely has there been such an obvious subsidy of the overpaid by the beleaguered. It raises the question: what if anything is the point of central banks in the new world we have entered?
What good exactly are central banks in today’s economy? They clearly did nothing to prevent the banking failures, excesses, and corruption that ran rampant in the last few years. Furthermore, they now seem to be acting to protect their own interests and are doing little to nothing for the average homeowner.
There are options for homeowners that need help, including careful use of a 2nd mortgage to pay down a first.
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