Because the system can witstand a failed sandwich shop or steel mill. The system cannot withstand a failed financial system.
It was teh only solution that anyone thought had a chance of working. the other proposal (to just lets the system crash was cinsidered unwise by many economists who didn’t want to live in Mad Max world).
People seem to forget what was going on in 2008. Grain shipments were rotting at the docks because the financial system had grinded to a halt and there was no way to pay for those shipments, auction rate municipal bonds became unsalable, the price of ammunition tripled, you couldn’t price securities, we were on the verge of a global run on banks.
Ok, on this part, if I were stating things reasonably, I would emphasize the word ‘every’. In other words bailing out the bottom level instead of the top.
I don’t think it was the only solution. It doesn’t even make sense. Why throw good money after bad? Doing something to satisfy the obligations of Goldman Sachs may have been a good idea, but leaving the same management in charge, doesn’t. And what was the necessity of making it a ‘no strings’ agreement?
That didn’t change all that much. There is a still a credit crisis. I don’t really think we should have done nothing, but I don’t see TARP as the ideal (for these banks; nodding to Tom Tildrum, I was only talking about the bank part of this).
Anyway, haven’t heard from you on the boards lately, thanks for commenting. I’m not as growly today, and don’t want argue this without backing up to a reasonable start.
I don’t know what you mean by that.
Are you arguing about the particular FORM that TARP took or are you arguing that TARP was in theory a bad idea? I don’t understand what you mean by good money after bad. I agree that in some cases, the terms of TARP were too lax and the bailout of AGI specifically was a fucking travesty. Compared to the bailout of GM where the equity lost all its value and the debtholder had to take pennies on the dollar (which was STILL mroe than they would have gotten in bankruptcy) makes me wonder why AIG creditors were made whole. I suspect taht Paulson’s relationships at Goldman Sachs probably had a lot to do with why Lehman was allowed to collapse while AIG paid 100 cents on every dollar of its obligation at taxpayer expense while paying themselves huge bonuses.
Things changed immensely. The global banking system is operating smoothly (at least until Greece defaults on its debt). Credit may not be flowing but people aren’t lining up at the banks to withdraw all their money.
Yeah I’ve been busy at work. Yeah, it pissed me off that we had to bail out the fuckers that got us into this mess only to have them turn around and tell us to fuck off.
For clarification, not argument, pumping money into economy will have some stimulative effect where ever it goes. No more comment on this subject though.
That’s probably my biggest problem with it. As I said, I think something should have been done.
I didn’t notice anybody lining up at the bank. And I doubt people had that much money to withdraw anyway.
Yes, and the best point I have is that it wasn’t necessary to do it,* this way*.
I’d certainly approve! I think this is the point of the jobs bill that the Senate can’t pass. Alas, we live in an age where Congress has made it harder for individuals to get personal bankruptcy protection. The current political regime is not in favor of “the little guy.”
Heck, I don’t think anyone thinks it was the only solution, or the ideal solution. Like everything Washingtonian, it was a slapped-together piece of compromise legislation, viewed as too little by about half our Representation…and too much by the other half! We’re watching sausages being made…
Yep! It’s like paying blackmail money to a would-be suicide bomber. “Give me the cash, or I blow up the entire city block.” Okay, yeah: you pay the money, since the alternative would be worse. But how can we possibly have any respect for the people who, now, oppose financial sector regulations designed to prevent this from happening again?
Trinopus
I think that the problem is the bankers personally got off without any damage to themselves, even though they were they ones that caused the problem and are still causing the problems. Personally i think that multimillion dollar fines and jail sentences should have bee handed out for Lloyd Blankfein, Jamie Dimon, Vikram Pandit, Ken Lewis, etc. Why nobody is outraged that these men were given huge bonuses for nearly ruining the world economy is something I just don’t understand.
I was dead set against TARP when it came out. I thought we should have taken over some banks and started lending to companies to jump start the economy. I thought the bankers deserved a day in court.
"Too Big To Fail’ showed the bankers had no remorse. They were willing to take the government money, because they thought they deserved it. There was an understanding that they would lend to get the economy started. They chose not to. They took free government money and bought Tbills, guaranteeing a return with no risk.
The bankers have learned one lesson. they can get away with anything. They can make fortunes and get saved by tax payers. They are still at it.