Should taxpayers bail out the banking system? One of the world’s leading international macroeconomists contrasts the Larry Summers “don’t-scare-off-the-investors” pro-bailout view with the Willem Buiter “they-ran-into-a wall-with-eyes-wide-open” anti-bailout view. He concludes that either way, taxpayers are always the losers. The best policy makers can do is to be merciless with shareholders and gentle with bank customers.
An old and familiar debate is back. Should taxpayers bail out the US banking system, quite possibly the British and European ones as well?
There are two standard views on the multi-trillion dollar question of who pays for getting us out of the financial crisis