U.S. Can Get Bailouts Right This Time
Terms in the financial crisis were too generous to most companies, but at least one rescue offers a promising template.
As good as it gets?
Photographer: Justin Sullivan/Getty Images North AmericaA little more than a decade ago, the U.S. was in the midst of wrenching a financial crisis. Many things contributed to the debacle. Government officials took charge, using whatever tools they had at hand, and managed to wrestle the worst of the 2008-09 financial crisis into submission, a saga I described in my book “Bailout Nation.”
The prescription was a mix of monetary and fiscal responses, though monetary stimulus did most of the heavy lifting. The worst economic effects eventually subsided and the economy more or less recovered. But the remedies brought with them a heavy dose of unintended consequences: The reliance on monetary policy disproportionately benefited those with capital, leading to big gains in equities and a recovery in residential real estate. Other effects included greater wealth inequality, not to mention the rise of new conspiracy theorists and political opportunists. Around the globe, there was a surge in populism, anti-globalization and a disdain for science and expertise.