Three years have passed since I wrote the "Atlas Bailed" piece. Today I read that the FDIC has finally hatched a plan to deal with failures at large-scale financial institutions. Click here for the WSJ article.
While people with a deep understanding of the matter see that allowing failures to occur is clearly the "right" policy to foster properly functioning capital markets, the general public has been snowed into the belief that the bailouts were a success. Few realize that we can trace our moribund economy, zombie banking institutions, fragile and inefficient capital markets, as well as the exploding federal reserve balance sheet directly to these bailouts. They also don't realize that the story is far from over. We will revisit these issues again - the underlying problems were never addressed.
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