A couple questions on the financial crisis.

Discussion in 'Economics' started by mdnijman, Apr 5, 2009.

  1. mdnijman


    1. What effect does nationalization of banks have on the economy, and what reasons could the government have to do (or not to do) this?

    2. If the government were to control the media coverage on the financial crisis by checking and approving everything before it is aired, to increase the trust the citizens have in the economy, would it have a positive or negative effect on the recovery of the economy?
  2. Neodude


    1. The banks would become more inefficient and would serve the needs of the politicians instead of investors, look to Venezuela for a great example of what happens when the Govt controls everything. It would make it easier for the government to create bubbles in other sectors of the economy. The government always tries to artificially stimulate pet projects instead of letting the free market decide where resources should go. Politicians desire to create public home ownership is partially responsible for this mess, through low interest rates and the creation of such agencies as Fannie and Freddie.

    2. There will never be truth in the media, especially if it is controlled by the government. Have you ever seen a politician give a direct and truthful answer to a question? If the government approves everything that goes on the air you will never hear about the corruption that happens in the government, take a look at Russia for a perfect example.