Agree absolutely the banks should be allowed to fail. Private companies take on risk and if they fail at that risk assessment – which is essentially the key role banks play in creating loans which are newly created currency – then the shareholders must cop the losses. Either a private buyer can come in and run it or most likely especially with the GFC and the massive loss of private sector confidence the government would need to take ownership, help to restructure and then ideally sell it off at a profit later. The government doesn’t need to profit in its own currency but in this case I think it sends a strong message about moral hazard.
I’m guessing we may disagree on how to best manage the bank failures which is fine as I appreciate the rigorous discussion :-). I’m from Australia and we were soooo lucky to have a government and good public sector treasury department with many smart people who proved government stimulus targeted right can solve the sudden drop in demand from economic crises by filling the spending gap. Australia avoided a recession through the GFC amazingly yet many people think government can’t do anything.
Here’s a good read: https://independentaustralia.net/politics/politics-display/we-really-must-talk-about-what-actually-did-save-australia,5644 (it’s 2 parts from memory) about how Australia got through the GFC. Be curious on your thoughts. It’s a very complex subject so a short reply like this doesn’t even come close to getting anywhere near enough info across but I appreciate the dialogue.
I’m not necessarily a big government guy either as I respect the ability of people like Elon Musk and Jeff Bezos to absolutely transform product segments and markets etc. But I think 25% government may be the sweet spot we have in Australia; a mix of Britain and USA. Yes it could be way more efficient but I read a great article yesterday on medium that helps explain innovation in this graphic below from the article. I’ll try find the link as you might find it of interest discussing how to get government efficient like the private sector.