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In Praise of Bankruptcy
Media Asset
Author: Henry Thompson
Online Publish Date:
Category: Booms and Busts, Money and Banks
Bankruptcy is a normal part of economic life, covered by laws that guarantee stockholders will be compensated as much as possible. More efficient firms move in to take over what is left of bankrupt firms, buying what can be put to productive use. There is no crime in bankruptcy and, if handled quickly, little economic harm. The present financial
In Praise of Bankruptcy
Mises Daily
Author: Henry Thompson
Online Publish Date:
Category: Financial Markets, Free Markets, Legal System
[An MP3 audio version of this article, read by Dr. Floy Lilley, is available here .]   In one word, the market approach to the financial problem is bankruptcy. Firms go bankrupt when they do not have enough revenue to pay their bills. Banks make money by borrowing from lenders at a low interest rate and lending to borrowers at a higher interest