Way back in September 2008, I wondered what had become of free market philosophy, as the US government scrambled to rescue crumbling banks.
Two weeks later, Ireland guaranteed bank deposits and bondholders.
A lot has happened since then.
Back in 2008, I asked what happened to the belief in creative destruction. I’m still wondering. Capitalism is simple. Businesses succeed, and businesses fail. Markets decide, and from the rubble, better businesses emerge.
I can just about accept the need for NAMA. Sometimes, markets fail so badly the State needs to step in.
But I do not understand the need for Anglo Irish Bank (effectively the State) to rescue Quinn Insurance.
Most of the time, State rescues don’t help. Creative destruction only works if companies are allowed to fail. Otherwise, healthy companies are penalised as their competitors are given a digout.
That may be true, but it’s not the point. The financial regulator is concerned that Quinn Insurance does not have the funds it needs to meet its liabilities.
In short, Quinn needs an investor to make up the shortfall.
Fine. Then let a private company invest. The State should stay out of it.