Sometimes Doing Something Is Better Than Nothing

Interesting tid-bit I ran across in the Economist this morning especially for those who don't think the bailout was or is a good idea:

Acting quickly also helps to cap the final bill for taxpayers. Sweden’s rescue of its banking system in 1992 pushed its gross public debt up to 73% of its GDP from 55% a year earlier. But the bad assets that the state took off the banks’ hands eventually turned a small profit. By the end of last year, Sweden’s public-debt ratio was 47% of GDP, well below international norms. Japan’s government, by contrast, allowed its bad-debt problem to fester. The fiscal support needed to prop up a struggling economy has led to a doubling of its public debt since the mid-1990s: it stood at 170% of national income by the end of last year.

Pretty much, doing nothing can have dire consequences. Many historians and economics believe that the lack of action by the Hoover administration in the late 1920s and into the 1930s only made the Depression worse. While FDR's New Deal programs had limited success, that may have been in part because it was too late—and it's hard to claim that the New Deal was a failure.

But one of the big criticism that I've come across concerning the stagnation of the Japanese economy since the early 1990s has been the lack of policy initiatives and action—and when they finally came their impact has been limited. Too little too late? The Nikkei 225 was at 18,650 at the start of 1995; today it sits at about 9,457 (losing about half of it's value).

Meanwhile, Sweden's quick response to crisis is probably part of the reason as to why we have not seen stagnation in their economy. (Sadly, I can't find a value for the OMXS30 from the mid-90s, but I'm pretty sure we'd see the OMXS30 up over the last 13 years or so).

While the bailout might not be ideal and it might now fix this countries financial problems quickly or completely, it is something. And historically, doing something has been much better than doing nothing.