As Geithner said, there were only limited immediate solutions to the financial crisis:
1) Let the banks fail and live with the consquences of a great depression.
2) Nationalize the banks. I would have supported nationalization and throwing the bankers out, but then who would manage the banks? Politicians and bureaucrats?
3) Take a middle road. That’s what Geithner and his team did. I’m thinking that this was the right approach. The economy has recovered and the private sector is investing again. The hard work remains to extricate the government from the mortgage markets.
As far as transfer of wealth from middle class, taxes have not been increased on the middle class to pay for any bailout.
Sure, currency debasement is like a tax but wouldn’t that be like a flat tax on everyone? Many would argue that a flat tax is fair.
I take a different view of stimulus spending. Stimulus spending benefits ordinary folks and is not money directly given to the bankers (unlike TARP). I would rather see stimulus spending than War spending.
If you believe that banks got unfair sweetheart deals during the bailouts, would you support a tax on banks as Geithner made the case for?
If the banks benefited disproportionately from government intervention, should they not pay a tax to help reduce the deficit?
The whole point of the financial bailouts was to get the economy growing again and arrest the job losses. By that standard, Geithner succeeded beautifully.
I think that some are too fixated on retribution and punishing the bankers. I was angry about what the bankers got away with, but I’ve let that go.
We now have a growing economy and the world’s financial system is on the mend. We should be thankful that a Great Depression has been avoided.[/quote]
Who says a “Great Depression” has been avoided? Look at what’s happened to our national debt, much of it attributed to the bailouts of the financial industry.
Just because we haven’t seen tax increases yet, does not mean they won’t be coming. Also, did you not notice the cuts in services — mostly to the poor and working people? That’s part of the damage done by the bailouts.
Here’s where some of our bailout money is going (as of Nov 2009 — if anyone knows of a more updated version, please let me know):
And…we don’t even know how bad the losses will be when all the GSE/FHA loans that have been made over the past few years begin to default (including refinances, which were designed to take the risks from the private market and force them onto taxpayers via “guaranteed” debt).
IMHO, the worst is yet to come. There is no easy way out of this mess. The only ones who have won are the bankers who had direct access to the policymakers and regulators who’ve funneled money in their direction. They’ve long hedged against inflation by buying up assets of all kinds (including commodities, forcing poor people around the world to starve). In the meantime, workers receive their wages in USD, which are becoming more and more worthless by the day.
