Ed Glaeser writes:
To give Fannie and Freddie more resources, the government is infusing
them with $200 billion. This may seem like throwing good money after
bad, but few economists, even ardent libertarians, are willing to let
them go belly-up. The cash infusion was necessary.
them with $200 billion. This may seem like throwing good money after
bad, but few economists, even ardent libertarians, are willing to let
them go belly-up. The cash infusion was necessary.
Yes, it does seem like throwing good money after bad. I guess I'm not even an ardent libertarian. I'm an extremely ardent libertarian. The government has now extended $400 billion or roughly $4000 per household to keep Fannie and Freddie afloat. That may not be enough. What is the public policy justification that makes virtually all economists, even mere ardent libertarians, unwilling to say no to this madness?
