If Goldman Sachs were to hit a hypothetical financial rock, would it be allowed to fail — to go bankrupt as did Lehman — or would it and its creditors be bailed out?
I posed this question on Sunday to four experts (Erik Berglõf, Claudio Borio, Garry Schinasi and Andrew Sheng) from various international organizations at the Institute for New Economic Thinking Conference, known as INET, in Bretton Woods, N.H. — and to a room full of people who are close to policy thinking both in the United States and in Europe. (Let me note, in the spirit of disclosure, that I’m on the advisory board of INET, which covered my travel expenses to the conference.)
In both the public interactions (you can view the video and in private conversations, my interpretation of what was said and not said was unambiguous: Goldman Sachs would be bailed out (again).
This is very bad news
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