Buiter’s idea to create new banks with bailout funds, seconded by Paul Romer and discussed by David Warsh is endorsed by uber-entrepreneur Marc Andreessen in this great video:
My better half, The Real Scientist, tells me that I should learn to compromise and my analysis should be conditioned on the fact that politicians will feel the need “to do something”. So getting angry about the mess they make (e.g. the disincentive to work created by the mortgage bail-out) when doing nothing would be optimal is like cursing the sun for rising in the morning. If the government feels the need to spend a ton of money fixing the banking system, investing in new banks is a good way to spend that money.
PS – No really. I’m off blogging for the rest of the week.