Letting banks fail produced better outcomes than bailouts in 2008

Evidence

Part of what follows is a conjecture—the business model of investment banking may be dying. If so, all the money we spent and have lost in recession was wasted on a system that may be in terminal decline anyway. Another part is a new tale of fiscal adjustment in two small countries: Iceland and Ireland. One let its banks fail and is now doing really quite well, especially when compared to Eurozone Europe. The other bailed them out and has condemned itself to a generation of misery because of it. — Mark Blyth, Austerity, 622

Categorization

• SEED: Iceland vs. Ireland as a controlled comparison on bailout vs. failure is a strong essay angle — the two small-n case contrast does heavy analytical work.
• XREF: Directly speaks to the austerity literature — Mattei and wider critiques of TINA logic. — connects to: The 2008 TARP bank bailout is a trigger of the austerity path that followed — Mark Blyth, Austerity: The History of a Dangerous…, 618; Government bailouts prevent capitalist crises from restoring profitability — Nick Couldry & Ulises A. Mejias, The Costs of Connection: How Data Is…, 801; Bank-assets-to-GDP ratio, not country size, determines whether banks can be let fail — Mark Blyth, Austerity: The History of a Dangerous…, 648 (+5 more)

Broader Connections

• Bank-assets-to-GDP ratio, not country size, determines whether banks can be let fail #qualifies (0.85) — Mark Blyth, Austerity, 648
• Government bailouts prevent capitalist crises from restoring profitability #corroborates (0.80) — Nick Couldry & Ulises A. Mejias, The Costs of Connection, 801