But then the government did step in, proving that if you go to them with a begging bowl and are a large financial institution, you will get help.
It should have been enough that the BoE operated as a lender of last resort, thus guaranteeing Northern Rocks survival. It was only the stupid if understandable reaction of NR savers rushing to withdraw all their money which meant the situation stepped outside of the market and into the hands of the government.
The banks didn't loan in the first place because they were concerned they wouldn't get their money back. What's wrong with that? If NR borrows strangely and gets itself into difficulty, then that's just a flaw of it's financial policy and those who have borrowed more prudently 'win'.
I'm not sure that I get the point of the article. Of course a business in the shit is going to ask for government help. Regardless of your principals or ideas about the free market, you're still going to take any help you can get, right?
no subject
It should have been enough that the BoE operated as a lender of last resort, thus guaranteeing Northern Rocks survival. It was only the stupid if understandable reaction of NR savers rushing to withdraw all their money which meant the situation stepped outside of the market and into the hands of the government.
The banks didn't loan in the first place because they were concerned they wouldn't get their money back. What's wrong with that? If NR borrows strangely and gets itself into difficulty, then that's just a flaw of it's financial policy and those who have borrowed more prudently 'win'.
I'm not sure that I get the point of the article. Of course a business in the shit is going to ask for government help. Regardless of your principals or ideas about the free market, you're still going to take any help you can get, right?