A new payments and savings system?
With US banks, and even brokerage firms like Bear Stearns, being bailed out on a massive scale, and the rating agencies largely discredited, it’s unsurprising that the question of whether governments could do a better job of some of the tasks now assigned to financial markets is being raised again, after a long period when any such suggestion was taboo. Nicholas Gruen had an interesting piece in the Fin, reproduced at Club Troppo, on the possibility of governments mobilising bonds as a liquid asset and using them as a basis for a payments and saving system to compete with private banks. I haven’t had time to think through the details, but the proposal is certainly worth a hard look. Certainly, the kind of knee-jerk anti-government reaction that used to come from the finance sector and its supporters is no longer tenable since their sudden conversion to soci@lism (at least when it comes to rescuing banks).