Why Bailouts Are Bad Medicine

Financial authorities around the world are edgy. Hardly a month passes without the discovery of a major fraud--Metall Gesellschaft, Barings, Daiwa Securities, Sumitomo Bank, and countless others. From time to time, an entire country goes over the financial cliff. Policymakers hope that new controls, regulations, and surveillance will soon be in place before some new disaster undermines the whole global financial system.

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