Bailouts now, damn the consequences

When you’re standing in the midst of an economic storm, it’s hard to see more than a few feet in front of you. The actions officials take to stem a crisis can have deep and profound consequences in the long run, but at the time, they may seem absolutely necessary. Following the Dot-Com crash and the 2001 terrorist attacks, the Federal Reserve under Alan Greenspan slashed interest rates to keep the economy from slipping into a long and painful recession. By 2004, the short-term rate was hacked to just 1 per cent. As we all know now, the move inflated the massive debt bubble that triggered the current economic crisis. It’s a common refrain to say Greenspan kept rates “too low, too long.”