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Well-connected banks and major corporations who make bad decisions and financially crash get bailouts. Citizens who make similar mistakes when they're young get

Well-connected banks and major corporations who make bad decisions and financially crash get bailouts. Citizens who make similar mistakes when they're young get their lives destroyed. Makes it pretty clear who "our" government really serves.

jdavis703 9y ago
When major banks fail they take out major parts of the economy. I'm sure we all remember the mayhem the big banks caused in the Great Recession. Secondly, the bailouts the banks received were loans -- they've now been repaid with interest, and the federal government has wound up making a profit. I'm no banker or Wall Street apologist, the big banks and executives should've faced large punishments for their role in the fraud that triggered the economic crisis. But we also need to be pragmatic and realize that the Bush and Obama administrations had very limited choices to fix the recession, which was made worse because banks basiclly stopped lending any money. By all means let's elect politicians who will regulate and break up big banks, but let's not score cheap populism points by deriding economic policy without proposing a viable alternative.
- mjevans 9y ago
  Those banks made bad decisions and instead of paying the cost (in evolutionary capitalism) of being frozen, orderly split up and re-processed among members of the market to re-define their value factor the banks were rewarded. I had hoped that they would be properly refactored so that the people could benefit from that change instead of the corporations. Maybe if that had happened the correction our house pricing so desperately needs could have happened.
- dreamdu5t 9y ago
  So a viable solution to student debt is for the government to forgive it all?
  - eropple 9y ago
    Realistically, I think that's going to have to be what happens. The horse is out of the barn. We can close the door through reforming student loan programs, but we have to bring the horse back, first. I say this as somebody who graduated college in 2010 with fairly minimal debt that I've already paid off. I was extremely lucky in my choice of career (and knowing I wanted to do it at the time) and I made better choices than most with regards to picking colleges and what school I attended, and so it kinda pisses me off a little bit--but me being pissed off is distinctly secondary to we have saddled two entire generations with impossible debts in the chase for "employability".
  - conanbatt 9y ago
    A viable one is to let students default on their debt. Then colleges incentives to survive on tuition will align to the students capacity to increase their income. There shouldn't be (considerable) debt going into dead-end college studies.
- adekok 9y ago
  > When major banks fail they take out major parts of the economy. Sure. So... do the bankers go to jail? Nope. They get bonuses. It's a great scam. They play with your money. If they lose, oh well, the government will bail them out. If they win, they keep the money. And either way, the people in charge get large bonuses. Only Iceland chose to charge the bankers who engaged in predatory / illegal behavior. Every other country pretty gave them a handshake, and a pat on the back. And it's still ongoing. https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/#46feafd52d83 https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-... Look, if the bank is "too big to fail", by all means bail them out. But nationalize it, fire the idiots in charge, and sell off the assets to people who aren't robber barons.
  - slavik81 9y ago
    They let Lehman Brothers die. The results of that were awful. They did more or less what you suggest with the next failure, AIG, which was bought by the government for a song. The government has since sold their shares, making 22 billion dollars profit off that bailout. The government did so well from the deal that the old CEO is trying to sue on the basis that the terms were unfair. After that, the government offered to buy assets from banks to ensure they had enough cash to keep doing business (TARP). Every bank was asked to participate because the government didn't want to single out the weakest ones. They were concerned the stigma would drive away business and push them over the edge. In the end, the government sold off the TARP assets they bought and made another 15 billion dollars profit off that. The bailouts were not that expensive. What was tremendously expensive was the impact of businesses all around the world shaking in fear of being short on cash and unable to secure a loan. That caused them to reduce spending, but one person's spending is another's income. That caused a spiral of dropping incomes and cutting costs. That's where layoffs, bankruptcies, and wage freezes came from. Government revenue dropped significantly too as tax money comes from sales and income. Banks should be smaller. Hell, companies in general should be smaller. We have far too many oligopolies and near-monopolies. Not enough competition. The problem is finding agreement on the specifics. We got a whole slew of new regulations in Dodd-Frank and Basel III, but nobody outside of financial experts know or understand them. The general public doesn't agree on much more than that they hate bankers. I know there's a few common things often pointed to, like reinstating Glass-Steagall, but there's plenty of disagreement there too. For one, I don't think it would have made much difference in this crisis. The counterparty risks that dominated this crisis were all in the investment sides of the companies anyways. It seems more like a pet cause than an actual solution. I guess the problem is that politics is broken. Ideally, smart, well-informed people would discuss these things and the public would listen and support the best ideas. That's not how politics works these days, though. Party ideology is basically religion at this point. Fix the government and everything else flows from there. But, that's easier said than done. The American government is fractured and broken because American society is fractured and broken. It's not clear how to make it whole again.
- eli_gottlieb 9y ago
  >When major banks fail they take out major parts of the economy. When the working class is bankrupt or in debt peonage, it takes out major parts of the economy.
- andrepd 9y ago
  All that rationalization and apologism fails when you consider this simple fact: there has been no one convicted of criminal wrongdoing in the US for bringing about the Great Recession. Much to the contrary, the persons in charge, the persons responsible for great hardship caused to billions of people worldwide for the past decade, they got big fat bonuses that not you or I could ever dream of making, perhaps not even in a lifetime of work. Note I'm not talking about banks as institution, I'm talking about personal responsibility and accountability. That alone shows how much of a farce everything is, how the super-rich and powerful simply play by a different set of rules. Yeah sure, the government had to step in to prevent an even bigger catastrophe. But if indeed it were the case that the people responsible were even for a moment under any threat of actual punishment for their crimes, it would not have all been swept under the rug, and the people in charge simply finding employment elsewhere.
deleted 9y ago
[deleted]
markshead 9y ago
> Citizens who make similar mistakes when they're young get their lives destroyed. Except in this case the mistake is that the government is willing to guarantee huge loans made to an 18-year-old. There are colleges out there that you can graduate with only a couple thousand dollars of debt and there are other colleges where you can graduate with hundreds of thousands of dollars of debt. A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. If students want to go beyond that, they would need to convince a bank that funding the more extravagant tuition was a reasonable risk to take. With the government-backed student loans, you rely on an 18-year-old to accurately do the risk analysis themselves and the current situation seems to indicate many aren't good at doing this.
- gergles 9y ago
  > A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. They DO limit the amount of government-backed loans you can take for an undergraduate degree to $31,000 (or $57,500 if you can convince TPTB that you are 'independent', which is much harder than it sounds.) Other loans don't have limits, but aren't government backed. They're private loans but get many of the same privileges, including that the loans aren't dischargeable in bankruptcy. This sort of makes sense, because you can't repossess a degree, but it also sort of doesn't because of the points you made.
  - derefr 9y ago
    Insofar as bankruptcy itself was meant to be an "escape hatch" to avoid designing forgiveness into every element of the system, adding any situation where bankruptcy is impossible seems like it destroys the purpose of having bankruptcy exist in the first place. I mean, I get the real problem: just-graduated students have no assets, but a lot of debt, so they have no disincentive from declaring bankruptcy. Hard to come up with a solution to that, since—if the just-graduated student had assets—they'd just be able to pay the debt with them.
    - mejin 9y ago
dominotw 9y ago
Bank bailout was not done out of kindness towards banks. It was done to save the economy from free fall. Infact some banks like JPM were forced to accept bail out even though they didn't want or need a bailout.

jdavis703 9y ago

When major banks fail they take out major parts of the economy. I'm sure we all remember the mayhem the big banks caused in the Great Recession. Secondly, the bailouts the banks received were loans -- they've now been repaid with interest, and the federal government has wound up making a profit. I'm no banker or Wall Street apologist, the big banks and executives should've faced large punishments for their role in the fraud that triggered the economic crisis. But we also need to be pragmatic and realize that the Bush and Obama administrations had very limited choices to fix the recession, which was made worse because banks basiclly stopped lending any money. By all means let's elect politicians who will regulate and break up big banks, but let's not score cheap populism points by deriding economic policy without proposing a viable alternative.

mjevans 9y ago
Those banks made bad decisions and instead of paying the cost (in evolutionary capitalism) of being frozen, orderly split up and re-processed among members of the market to re-define their value factor the banks were rewarded. I had hoped that they would be properly refactored so that the people could benefit from that change instead of the corporations. Maybe if that had happened the correction our house pricing so desperately needs could have happened.
dreamdu5t 9y ago
So a viable solution to student debt is for the government to forgive it all?
- eropple 9y ago
  Realistically, I think that's going to have to be what happens. The horse is out of the barn. We can close the door through reforming student loan programs, but we have to bring the horse back, first. I say this as somebody who graduated college in 2010 with fairly minimal debt that I've already paid off. I was extremely lucky in my choice of career (and knowing I wanted to do it at the time) and I made better choices than most with regards to picking colleges and what school I attended, and so it kinda pisses me off a little bit--but me being pissed off is distinctly secondary to we have saddled two entire generations with impossible debts in the chase for "employability".
- conanbatt 9y ago
  A viable one is to let students default on their debt. Then colleges incentives to survive on tuition will align to the students capacity to increase their income. There shouldn't be (considerable) debt going into dead-end college studies.
adekok 9y ago
> When major banks fail they take out major parts of the economy. Sure. So... do the bankers go to jail? Nope. They get bonuses. It's a great scam. They play with your money. If they lose, oh well, the government will bail them out. If they win, they keep the money. And either way, the people in charge get large bonuses. Only Iceland chose to charge the bankers who engaged in predatory / illegal behavior. Every other country pretty gave them a handshake, and a pat on the back. And it's still ongoing. https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/#46feafd52d83 https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-... Look, if the bank is "too big to fail", by all means bail them out. But nationalize it, fire the idiots in charge, and sell off the assets to people who aren't robber barons.
- slavik81 9y ago
  They let Lehman Brothers die. The results of that were awful. They did more or less what you suggest with the next failure, AIG, which was bought by the government for a song. The government has since sold their shares, making 22 billion dollars profit off that bailout. The government did so well from the deal that the old CEO is trying to sue on the basis that the terms were unfair. After that, the government offered to buy assets from banks to ensure they had enough cash to keep doing business (TARP). Every bank was asked to participate because the government didn't want to single out the weakest ones. They were concerned the stigma would drive away business and push them over the edge. In the end, the government sold off the TARP assets they bought and made another 15 billion dollars profit off that. The bailouts were not that expensive. What was tremendously expensive was the impact of businesses all around the world shaking in fear of being short on cash and unable to secure a loan. That caused them to reduce spending, but one person's spending is another's income. That caused a spiral of dropping incomes and cutting costs. That's where layoffs, bankruptcies, and wage freezes came from. Government revenue dropped significantly too as tax money comes from sales and income. Banks should be smaller. Hell, companies in general should be smaller. We have far too many oligopolies and near-monopolies. Not enough competition. The problem is finding agreement on the specifics. We got a whole slew of new regulations in Dodd-Frank and Basel III, but nobody outside of financial experts know or understand them. The general public doesn't agree on much more than that they hate bankers. I know there's a few common things often pointed to, like reinstating Glass-Steagall, but there's plenty of disagreement there too. For one, I don't think it would have made much difference in this crisis. The counterparty risks that dominated this crisis were all in the investment sides of the companies anyways. It seems more like a pet cause than an actual solution. I guess the problem is that politics is broken. Ideally, smart, well-informed people would discuss these things and the public would listen and support the best ideas. That's not how politics works these days, though. Party ideology is basically religion at this point. Fix the government and everything else flows from there. But, that's easier said than done. The American government is fractured and broken because American society is fractured and broken. It's not clear how to make it whole again.
eli_gottlieb 9y ago
>When major banks fail they take out major parts of the economy. When the working class is bankrupt or in debt peonage, it takes out major parts of the economy.
andrepd 9y ago
All that rationalization and apologism fails when you consider this simple fact: there has been no one convicted of criminal wrongdoing in the US for bringing about the Great Recession. Much to the contrary, the persons in charge, the persons responsible for great hardship caused to billions of people worldwide for the past decade, they got big fat bonuses that not you or I could ever dream of making, perhaps not even in a lifetime of work. Note I'm not talking about banks as institution, I'm talking about personal responsibility and accountability. That alone shows how much of a farce everything is, how the super-rich and powerful simply play by a different set of rules. Yeah sure, the government had to step in to prevent an even bigger catastrophe. But if indeed it were the case that the people responsible were even for a moment under any threat of actual punishment for their crimes, it would not have all been swept under the rug, and the people in charge simply finding employment elsewhere.

deleted 9y ago

[deleted]

markshead 9y ago

> Citizens who make similar mistakes when they're young get their lives destroyed. Except in this case the mistake is that the government is willing to guarantee huge loans made to an 18-year-old. There are colleges out there that you can graduate with only a couple thousand dollars of debt and there are other colleges where you can graduate with hundreds of thousands of dollars of debt. A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. If students want to go beyond that, they would need to convince a bank that funding the more extravagant tuition was a reasonable risk to take. With the government-backed student loans, you rely on an 18-year-old to accurately do the risk analysis themselves and the current situation seems to indicate many aren't good at doing this.

gergles 9y ago
> A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. They DO limit the amount of government-backed loans you can take for an undergraduate degree to $31,000 (or $57,500 if you can convince TPTB that you are 'independent', which is much harder than it sounds.) Other loans don't have limits, but aren't government backed. They're private loans but get many of the same privileges, including that the loans aren't dischargeable in bankruptcy. This sort of makes sense, because you can't repossess a degree, but it also sort of doesn't because of the points you made.
- derefr 9y ago
  Insofar as bankruptcy itself was meant to be an "escape hatch" to avoid designing forgiveness into every element of the system, adding any situation where bankruptcy is impossible seems like it destroys the purpose of having bankruptcy exist in the first place. I mean, I get the real problem: just-graduated students have no assets, but a lot of debt, so they have no disincentive from declaring bankruptcy. Hard to come up with a solution to that, since—if the just-graduated student had assets—they'd just be able to pay the debt with them.
  - mejin 9y ago

dominotw 9y ago

Bank bailout was not done out of kindness towards banks. It was done to save the economy from free fall. Infact some banks like JPM were forced to accept bail out even though they didn't want or need a bailout.