Socialist planners don’t have price signals to go by, so historically they’ve been forced to use cruder measures, like line length. If the line for bread stretches around the block, maybe that means bread is priced too cheap. As we’ve argued, the long line for the bailout suggests we’re giving away cash to cheaply. And it seems the line is growing
WSJ: Treasury and banking regulators say as many as 1,800 publicly held institutions could apply for government investments in coming weeks, out of concern that failing to do so could make them losers in a banking sector reshaped by the Treasury’s $700 billion rescue plan.
Depending upon conditions still being crafted by Treasury, thousands more private banks could apply for government capital as well, a Treasury spokeswoman said Sunday.
Not that we can’t fault them for doing this. If you’re a bank, and you don’t get some kind of extra cash injection — especially a cheap one — you’re a fool (er, the executives are). A few banking heads of stood up and claimed to not want the bailout cash, but this is all jockeying. The more banks that accept the money, the more it’s acceptable for others to do so, and so on. Pretty soon the line is around the block.
Wait, whatever happened to the plans to have some kind of reverse auction. That might solve this problem.
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