The Bailouts Must End

John P. Hussman, Ph.D., of Hussman Investment Trust:

Treasury Secretary Timothy Geithner has scheduled a trip to Europe this week to urge European leaders "to pay better attention to potential market reactions to policy moves, and to accelerate the European rescue program." This promises to be a fiasco. What could European leaders possibly find more arrogant than to be lectured on bailout policy - not simply by the U.S., but specifically by a one-trick pony bureaucrat whose chief trick is the ability to smoothly talk the language of prudence while simultaneously pillaging the fiscal stability of an entire nation for the benefit of bondholders who made bad loans?

...It would be wise for investors to abandon the fear-mongering word "failure" in preference for the instructive word "restructuring." Thinking of credit strains in terms of failure prompts a natural but improper impulse to avoid that failure through bailouts, at the cost of those who had no part in the mismanagement. In contrast, recognizing the need for restructuring places the costs directly where they belong - on those who provided and managed the capital. It also immediately turns attention to proper solutions and negotiations between the borrowers and lenders.

Complete commentary at HussmanFunds.com.