This is where you and I will have to agree to disagree. I do not for a moment believe that they avoided calamity. They’ve only postponed it, prolonged it, and spread the damage across a wider swath of our economy. IMHO, the eventual consequences of the bailouts will be much worse than if they had left things alone, or at least if they had avoided rewarding the people who caused the “crisis” in the first place (borrowers, lenders, financial firms, etc.).
Mind you, I have always asserted that they would need to backstop the FDIC, SIPC and PBGC, in addition to increasing infrastructure spending and jobless/training programs. Yes, we would have had a severe downturn, but it would have been quick, and we could have begun working our way out of it in a much healthier way IF we had focused more on productive endeavors…instead of bailing out the liars and thieves.
The world was never going to end just because some banks (even major ones) collapsed. If foreign companies want to buy them, so be it. Foreign entities have purchased and now control much more important entities (IMHO) than banks. I want to see us move away from a reliance on the FIRE sectors, and move back into more productive uses of our country’s capital. We’ve squandered a tremendous opportunity to squash the very entities that have hollowed out our country’s economy and our way of life over the past few decades. I want to see the middle-class return. I want to see decent, living wages for a majority of the population. I want to see a severe reversal of the wealth divide that has destroyed us.
With the existing bailouts, we have rewarded the very people who have damaged us most. THAT is what I am so strongly opposed to.[/quote]
First, let’s agree the intent of the bailouts were to defend this country against an economic collapse. What you’re talking about now is effectiveness and here we have some common ground. I posted this relatively updated bailouts tracker link in another thread.
If you view the bailouts in totality, it’s clear to see this shotgun approach attempted to benefit the greater population either directly or indirectly. Yes there’s lots of giveaways, but while some were focused on banks, I was more interested in things like the liquidity of the bond market, especially the billions in corporate debt maturing in 08/09. If businesses were unable to refinance their debt, or if the cost of borrowing doubled/tripled, or if credit ratings were downgraded, there is absolutely no doubt in my mind the resulting next wave of cost cutting measures across fortune 500 companies (layoffs, inventory purge, etc) and subsequent domino effect to the econmy would have put us in a depression. The world may not end, but the suffering would have been intolerable to the point the govt would have taken action anyways. I agree it is kicking the can down the road, but kick it far enough and the pain gets diluted and manageable.
Regarding other responses to my post, my point has nothing to do with value and price, nor the right to profit from transactions, just the irony and hypocrisy of bubble sellers that criticize bailouts for replenishing the money that ultimately transferred to their bank accounts.
As for this…
[quote] What if the buyer in your $2M – $4M example knows that the city is about to redevelop the entire area – three years later the property is worth $6M – who’s the ‘naive’ one at this point? – the seller who, according to you, took advantage of a naive buyer; or the buyer who made a paper profit of $2M in three years? [/quote]
Let’s hope you don’t work for the CCDC or a developer. For a 2M potential profit, this type of information is without a doubt confidential. If you are caught using it for personal gain, you will be fired for ethical reasons at a minimum and face criminal charges worst case.
