July 23, 2013

All public intervention profits could later turn out to be just other can-kicked-down-the-road losses.

Sir, I refer to Andreas Utermann´s “Risky bailouts can deliver a hefty profit for central banks” July 23.

The article is based on the presumption that those interventions where the government has made some profits are good, and that those were it has lost, are bad.

Unfortunately it is not as simple. In effect some of the profitable interventions could easily turn out to be the most expensive if for instance they just kept in place some who should have benefitted from retiring.

Does this make me an enemy of all government interventions? Absolutely not! It all just stops me from being an automatic congratulant of these.

We should also remember that evaluating any current government action, when ordinary economic realities have been suspended by programs such as quantitative easing, is an extremely hazardous thing to do.

In short the truth is that all current profits derived from public interventions, could later just turn out to be other can-kicked-down-the-road losses.