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The bailout of Northern Rock



Samizdata.net


I was going to write a long response but realised that life was too short.  It's this sort of thing and the article further down which do so much harm to Libertarians.

Being able to make statements like "Of course one feels very sorry for the people who have savings with NR and I suppose many of them are mightily relieved at the turn of events. I am sure I would be relieved if I were in their position.But hard cases make bad law, and bad policy."

Then comes, "The ultimate culprits, as I said the other day, are the central banks and their historically low interest rates. With so much cheap liquidity, the sort of returns investors made on safe investments were peanuts and so they took greater risks for often only a slightly higher reward."

The history of SIVs and similar bond units is pretty old and started WAYYYY before there was this much cheap money and liquidity - in fact it goes back into the dark days of the early 90s (if not earlier) with, IIRC, Morgan Stanley et al.

To then compare this situation with Barings is just ridiculous.

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