for my next trick….

[briansd1]

SD Realtor, actually, I don’t think the bailout was the only solution.

I would have preferred a nationalization like they did with Northern Rock in Britain or the RTC back in the 1990s The government could have nationalized Goldman, Morgan, Citibank, etc..

But that would have created more government involvement in the financial supply chain, not less.

That was my point.

*

BTW, I think that there was a more political, national security dimension to the bailout.

American banks were successful in securitizing away risk. And they offloaded the securities to European banks and pension funds.

But the European buyers of those securities purchased insurance policies with AIG.

The Europeans are our reluctant allies in the Wars in Iraq and Af-Pak.

A bankruptcy of the big banks and AIG would have forced the Europeans to take big haircuts. They had already signaled that the would not and that American taxpayers would have to bear the cost of financial hubris.

Can we force the Chinese and Japanese to take haircuts on their GSE investments? We may do so with inflation, but we certain can’t force face value losses.

Our debts were increasing externally held. So we had no choice but to make our partners whole lest they decide to no longer fund and support us.

[sdduuuude]

[quote=briansd1]
Had the banks been allowed to fail, the FDIC would have taken them over which equates to wholesale nationalization (like the Northern Rock nationalization in Britain).
[/quote]

The gov. does not continue to run the bank forever, though. Assets get liquidated, the FDIC moves on.

Also, it seems that banks aren’t paying enough for their FDIC insurance. If they had to pay more for it, it wouldn’t have been abused.

Nationalization as a stepping-stone to eliminating weaker banks without hosing the depositors seems a reasonable thing.

The current situation with all the bailouts and backstops IS more like nationalization than anything, except without the benefits. The govt is sharing the risk, but not the rewards of the bank. It’s the worst of both worlds, really. If the banks fail, the taxpayers are hosed, but if they make money, the taxpayers don’t make any money.

[sdduuuude]

[quote=briansd1]
Had the banks been allowed to fail, the FDIC would have taken them over which equates to wholesale nationalization (like the Northern Rock nationalization in Britain).
[/quote]

The gov. does not continue to run the bank forever, though. Assets get liquidated, the FDIC moves on.

Also, it seems that banks aren’t paying enough for their FDIC insurance. If they had to pay more for it, it wouldn’t have been abused.

Nationalization as a stepping-stone to eliminating weaker banks without hosing the depositors seems a reasonable thing.

The current situation with all the bailouts and backstops IS more like nationalization than anything, except without the benefits. The govt is sharing the risk, but not the rewards of the bank. It’s the worst of both worlds, really. If the banks fail, the taxpayers are hosed, but if they make money, the taxpayers don’t make any money.

[sdduuuude]

[quote=briansd1]
Had the banks been allowed to fail, the FDIC would have taken them over which equates to wholesale nationalization (like the Northern Rock nationalization in Britain).
[/quote]

The gov. does not continue to run the bank forever, though. Assets get liquidated, the FDIC moves on.

Also, it seems that banks aren’t paying enough for their FDIC insurance. If they had to pay more for it, it wouldn’t have been abused.

Nationalization as a stepping-stone to eliminating weaker banks without hosing the depositors seems a reasonable thing.

The current situation with all the bailouts and backstops IS more like nationalization than anything, except without the benefits. The govt is sharing the risk, but not the rewards of the bank. It’s the worst of both worlds, really. If the banks fail, the taxpayers are hosed, but if they make money, the taxpayers don’t make any money.

[sdduuuude]

[quote=briansd1]
Had the banks been allowed to fail, the FDIC would have taken them over which equates to wholesale nationalization (like the Northern Rock nationalization in Britain).
[/quote]

The gov. does not continue to run the bank forever, though. Assets get liquidated, the FDIC moves on.

Also, it seems that banks aren’t paying enough for their FDIC insurance. If they had to pay more for it, it wouldn’t have been abused.

Nationalization as a stepping-stone to eliminating weaker banks without hosing the depositors seems a reasonable thing.

The current situation with all the bailouts and backstops IS more like nationalization than anything, except without the benefits. The govt is sharing the risk, but not the rewards of the bank. It’s the worst of both worlds, really. If the banks fail, the taxpayers are hosed, but if they make money, the taxpayers don’t make any money.

[sdduuuude]

[quote=briansd1]
Had the banks been allowed to fail, the FDIC would have taken them over which equates to wholesale nationalization (like the Northern Rock nationalization in Britain).
[/quote]

The gov. does not continue to run the bank forever, though. Assets get liquidated, the FDIC moves on.

Also, it seems that banks aren’t paying enough for their FDIC insurance. If they had to pay more for it, it wouldn’t have been abused.

Nationalization as a stepping-stone to eliminating weaker banks without hosing the depositors seems a reasonable thing.

The current situation with all the bailouts and backstops IS more like nationalization than anything, except without the benefits. The govt is sharing the risk, but not the rewards of the bank. It’s the worst of both worlds, really. If the banks fail, the taxpayers are hosed, but if they make money, the taxpayers don’t make any money.

[briansd1]

[quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.

That would be the equivalent of quitting credit cold turkey. It’s very painful to do and the population is no prepared to do so. Do you know of many households who could stop using credit cards immediately?

What happens if consumption is slashed in 1/2? Everything would come to a halt and there would be massive unemployment. Stores would close and commercial property owners would default on their loans.

I’m a small investor with wherewithal and I would love to buy some commercial properties for cheap…. Your scenario would work out just fine for me.

[briansd1]

[quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.

That would be the equivalent of quitting credit cold turkey. It’s very painful to do and the population is no prepared to do so. Do you know of many households who could stop using credit cards immediately?

What happens if consumption is slashed in 1/2? Everything would come to a halt and there would be massive unemployment. Stores would close and commercial property owners would default on their loans.

I’m a small investor with wherewithal and I would love to buy some commercial properties for cheap…. Your scenario would work out just fine for me.

[briansd1]

[quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.

That would be the equivalent of quitting credit cold turkey. It’s very painful to do and the population is no prepared to do so. Do you know of many households who could stop using credit cards immediately?

What happens if consumption is slashed in 1/2? Everything would come to a halt and there would be massive unemployment. Stores would close and commercial property owners would default on their loans.

I’m a small investor with wherewithal and I would love to buy some commercial properties for cheap…. Your scenario would work out just fine for me.

[briansd1]

[quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.

That would be the equivalent of quitting credit cold turkey. It’s very painful to do and the population is no prepared to do so. Do you know of many households who could stop using credit cards immediately?

What happens if consumption is slashed in 1/2? Everything would come to a halt and there would be massive unemployment. Stores would close and commercial property owners would default on their loans.

I’m a small investor with wherewithal and I would love to buy some commercial properties for cheap…. Your scenario would work out just fine for me.

[briansd1]

[quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.

That would be the equivalent of quitting credit cold turkey. It’s very painful to do and the population is no prepared to do so. Do you know of many households who could stop using credit cards immediately?

What happens if consumption is slashed in 1/2? Everything would come to a halt and there would be massive unemployment. Stores would close and commercial property owners would default on their loans.

I’m a small investor with wherewithal and I would love to buy some commercial properties for cheap…. Your scenario would work out just fine for me.

[sdduuuude]

[quote=briansd1][quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.[/quote]

That hasn’t not happened with the current plan. Just been pushed down the road a bit, or possibly spread out over years and years, not prevented. It is a cost we will somehow have to incur to get out of the mess we are in.

[sdduuuude]

[quote=briansd1][quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.[/quote]

That hasn’t not happened with the current plan. Just been pushed down the road a bit, or possibly spread out over years and years, not prevented. It is a cost we will somehow have to incur to get out of the mess we are in.

[sdduuuude]

[quote=briansd1][quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.[/quote]

That hasn’t not happened with the current plan. Just been pushed down the road a bit, or possibly spread out over years and years, not prevented. It is a cost we will somehow have to incur to get out of the mess we are in.

[sdduuuude]

[quote=briansd1][quote=sdduuuude]

The Q is – do you want to continue to rely on banking institutions which are so unsound that they would have collapsed without a bailout ? Or do you want to have available to you a stronger breed of bank who weathered the recent storm on their own ?[/quote]

In theory, I agree with you…

But that would have caused a huge recession that would have thrown millions into poverty.[/quote]

That hasn’t not happened with the current plan. Just been pushed down the road a bit, or possibly spread out over years and years, not prevented. It is a cost we will somehow have to incur to get out of the mess we are in.

[Author]

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