What if the bailouts didn't happen?

[The Whit]

What happens to the economy if the bailout never happened.  No money for the banks or the auto industry?  What happens to unemployment?  Does the economy recover?  How long would it take?   What would you do if you had unlimited power as a dictator in this situation?  

Keep it civil.

[Icarus]

The private sector would bail out the government, maybe.

[LikelyToBreak]

This is what one Rep. said they were told:
 [youtube:h1dkqzoz]http://www.youtube.com/watch?v=HaG9d_4zij8[/youtube:h1dkqzoz]
The financial institutions could have caused riots leading to martial law.  It could have been worse than the Civil War on the American populace.  Bush might have been appointed dictator, just until the crisis was over.  Which might have taken thirty or so years.  So, it was a good thing Obama supported the 2008 and 2009 bailouts, because the banks would have closed their doors and just waited for the riots to begin.

Just an opinion.

[AllPurposeAtheist]

The financeers (sp) of the world profit from our outrage and war because they're the people who sell the tools of death. Had the banks all failed and not a dime given those fuckers would have made more profit to the point of prophecy that we as atheists and normal citizens of the world would have killed each other further enriching the war machine. They try their damnedest to push us into conflict so they can run off with the spoils of war. It's a no win situation for us because we're forced to appease the war LORDS of Wall Street.

[The Whit]

I really don't think the bailouts worked.  WITH the bailouts the unemployment level rose far higher than they predicted it would rise without the bailouts.
http://www.therightscoop.com/wp-content ... August.jpg

http://elsa.berkeley.edu/~saez/saez-USt ... s-2012.pdf

From 2009 to 2012, average real income per family grew modestly by
6.0% (Table 1). Most of the gains happened in the last year when average
incomes grew by 4.6% from 2011 to 2012.
However, the gains were very uneven. Top 1% incomes grew by
31.4% while bottom 99% incomes grew only by 0.4% from 2009 to 2012.
Hence, the top 1% captured 95% of the income gains in the first three years
of the recovery. From 2009 to 2010, top 1% grew fast and then stagnated
from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from
2010 to 2011.

The stock market is taking off, but that's benefiting a narrower group of people.

http://economix.blogs.nytimes.com/2013/ ... t-benefit/

So, trickle down economics doesn't work.  Certainly not with any measure of haste.

http://www.youtube.com/watch?v=_HtvJp9pQkI

If he knew this, then what the hell was he doing signing this shit?  

IMO he should have let these goons reap the rewards by letting them go bankrupt.  Let the FDIC do wtf it was intended to do: protect depositors.  When the people realize that their deposits are safe they stop rushing to the teller to withdraw their cash.  Surviving banks will be less strained and banks that go bankrupt lend their assets to the marketplace.  There is a slight deflation and prices drop, meaning the money in the people's hands go farther.  This coupled with the already low prices of liquidated assets gives people more purchasing power and encourages investment and consumption that leads to a quick bottom up rebound.

The rebound would be greatly accelerated if health care reform that actually reformed the health care industry TO THE EXTENT THAT IT WOULD COST LESS.  And I'm not talking about health care insurance.  I'm talking about the cost of the care itself.

[SGOS]

Obviously, there is a lot of controversy over this.  NPR, which is usually pretty honest, interviewed one senator who said the bailouts were unnecessary.  It was a long time ago and I can't remember the explanation, but it was fairly convincing and made me wonder.  

This might have been true considering most of the banks passed the so called stress tests, which would have required them to return the money.  So apparently they didn't really need the money.  If they did return the money or not, I don't know.

But the bailouts were done under panic conditions, which always makes me wonder.  When congress wants to do something, be it invade another country or throw money at something, they tell us it's a crisis so that everyone panics and lets them do what they want.  I'm also suspicious about how the thing was pushed through by former bankers in the president's cabinet who managed to save the banks they used to work for.

What would have happened if they were not bailed out?  We will never know, because that path was not taken, but our government tells us we would have had a depression, so most people believe we would have had a depression.  But of course the government would have to say that.  Otherwise, it would look like they just transferred a bunch of middle class wealth to wealthy bankers, and they wouldn't get enough votes to stay in power.

They tell us the banks were too big to fail, but apparently, homeowners were not.  So fuck the home owners.

[Jason78]

What happens to the economy if the bailout never happened.  No money for the banks or the auto industry?  What happens to unemployment?  Does the economy recover?  How long would it take?   What would you do if you had unlimited power as a dictator in this situation?  

Keep it civil.

If the bailouts never happened, there would be a lot of rich people that would be ever so slightly less rich.

[Mister Agenda]

It's impossible to really know 'what would have happened if', but I think it's a reasonable scenario that some of the institutions bailed out would have gone bankrupt, whereupon their assets would have been bought at discount prices by other institutions.

I think the result for the general population would have been a little better, due to saving the government hundreds of billions of dollars to fix something that they should have let play out. Few people re-elect a politician based on them not doing something about a problem, though.

[Rejak]

What if instead of bailing out the banks we bought out the banks. Then instead of making a show of regulating wayward banks we buy then out fire everybody but the janitors,Then run the banks like they are suppose to be run and funnel the profits back into the treasury. Bet that would go a long way toward reducing the deficit.

[LikelyToBreak]

Rejak wrote:

What if instead of bailing out the banks we bought out the banks. Then instead of making a show of regulating wayward banks we buy then out fire everybody but the janitors,Then run the banks like they are suppose to be run and funnel the profits back into the treasury. Bet that would go a long way toward reducing the deficit.

The Federal Reserve owns and prints our money.  The banks own the Federal Reserve.  To do as you suggest, we would have to take over the Federal Reserve.  If we took over the Federal Reserve we would be taking over the banks.  Our monied masters would not allow that.  

Consider that the last President who was even thinking of challenging the Federal Reserve was John F. Kennedy.  Conveniently, he was shot by a lone crazed FBI informant before he could do a Lincoln and print US greenbacks getting around the Federal Reserve.  His plan was to avoid high interest rates, yet still have the money needed to keep the economy running smoothly.  Had it worked, the Federal Reserve would have lost much of their hold of the American people.  But, well you know, shot and all that.

[Jason Harvestdancer]

All of the anarchy and chaos of that Mad-Max dystopia Iceland.

You remember Iceland.  They jailed the people who did wrong instead of bailing them out.  They're in good economic shape today.

[Jason78]

All of the anarchy and chaos of that Mad-Max dystopia Iceland.

You remember Iceland.  They jailed the people who did wrong instead of bailing them out.  They're in good economic shape today.

What a marvelous idea :D

[Rejak]

LTB wrote

The Federal Reserve owns and prints our money. The banks own the Federal Reserve. To do as you suggest, we would have to take over the Federal Reserve. If we took over the Federal Reserve we would be taking over the banks. Our monied masters would not allow that.

Sounds like a good idea to me :-k
It wouldn't necessarily mean a takeover of the federal reserve, just those failed banks that had a seat on the board.
Doing away with the federal reserve would be a good idea also.

[zarus tathra]

You can't increase employment over the long run without increasing consumption, and you can't increase consumption without increasing purchasing power. And you can't increase purchasing power by debasing you currency through inflation. That's why China pegging its currency to ours has depressed Chinese consumption and therefore the world economy.