An often repeated saying is that the definition of insanity is to continue to do the same things and to expect different results. I know we have made this point several times here, but it is worth pointing out until it sinks in everywhere: We have a problem caused by easy credit and the solution our leaders have offered is more easy credit; we have a problem of “too large to fail” institutions and our leaders have encouraged even greater consolidation as a solution.
Now the debate is over nationalization of banks. Paul Krugman put it well in a recent column when he compared the government making a decision to nationalize underperforming banks to the Claude Rains line in Casablanca, “I am shocked shocked at the miserable state of their balance sheets.”
