In an opinion piece in the WSJ today, David Roche, a London expert in banking and monetary policy, discusses the liklihood that both the UK and the US will nationalize their respective banking systems. He writes, in part:
How has it come to this? The global credit crisis and the ensuing economic slump we are now entering have both ultimate and proximate causes. The ultimate cause was the ingrained social behavior of the U.S., the U.K. and many other economies over the past two decades that put instant gratification of consumption over the ability to pay for it. Thrift gave way to borrowing and excessive spending. That in turn led to huge global imbalances and distortions. The proximate cause of the crisis was how these excesses were financed through liquidity creation in innovative ways and in huge proportions.
Note the connection between individual - shall I say it? - virtue, on the one hand, and the present economic situation, on the other. And yet, as my friend Juan points out, the government appears to believe that the answer is to spend even more money, borrowing against nothing else but the future, hoping that a newly virtuous citizenry will defer its gratification, get to work, and support not only itself but also assume the inevitable burden of taxation and inflation that must surely compensate for its spending.
UPDATE: Glenn's thinking along the same lines.