4 ms·

I’m looking forward to too big to fail bankers being bailed out while little people like me will be supposed to just applause the big banks not going under.

AnimalMuppet 8y ago
Unfortunately, banks going under also ruins little people like us. I thought the government did a good job with the first few institutions rescued in 2008. Their shareholders got nothing (or pennies), the management got kicked to the curb, but the institution itself survived, and took care of depositors. That's the way it should be done... except that it's disruptive, and the disruption helps further the crisis. (Jobs were lost, even if deposits weren't. Not all of the lost jobs were in the financial industry. That kind of crisis hurts little people in many different ways.) It seems to be better, even for the little people, to help before things get that far, even if it doesn't wipe out all the people we'd like to see pay for the mess they made.
- richardknop 8y ago
  I wonder if little people are being hurt more by the current perpetuating hegemony of the ruling class or if they would be better off if we let free market take care of this for once and let the banks fail. It would hurt but perhaps it would be better long term for the little people. All of the bad debt and Wall Street Ponzi schemes would be cleared off and a new economy which doesn’t rely on free money from government to the banks would form.
  - dragontamer 8y ago
    That was what Bush did at first during 2007 / 2008. Bush let Bear Sterns and Lehman Brothers go bankrupt. Then IndyMac went bankrupt. And then... https://www.nytimes.com/2008/10/01/business/smallbusiness/01CREDIT.html https://www.nytimes.com/2008/10/01/business/smallbusiness/01... Credit Crunch. As banks fail, they closed credit-cards and other loans. My personal credit card dropped to $5,000 line (down from $10,000) for example. I don't rely on my credit card, so it wasn't a big deal. But there were lots of businesses and factories which relied upon credit to make payroll. The fundamental business was solid, but remember that Businesses in America are typically Net90 (paid 90-days after delivery). So if you had a very successful month selling things, you wouldn't be paid until 3 months later. So what do you do? You put it on a credit card, so that you can pay your workers. Too bad those credit cards failed and closed up, and all those workers had to be fired instead. ---------- If you let banks fail, then innocent businesses / people who rely upon those banks will also fail. In effect, banks hold the American People themselves hostage, as people are reliant on financial services to make payroll.
elliekelly 8y ago
Just wait until the student loan bubble bursts. Everyone is expecting some sort of student loan bailout sooner or later. Everyone will be shocked when the banks get the bailout and the students get nothing.
- ethbro 8y ago
  If you're bailing out the banks for writing off non-performing loans, then by definition students get their loans written off.
  - richardknop 8y ago
    So students who took huge loans get scot free but a single mother who took a loan to support her two children will be left with her debt. I see no problem with that. Moral hazard and all that. Let’s just forgive all debt, what could go wrong.
    - ethbro 8y ago
      In the context of this question, my response was about a hypothetical recapitalization of banks if the student loan bubble became untenable.
      - richardknop 8y ago
        My point about moral hazard stays the same and unaddressed.
        ethbro 8y ago
        In this hypothetical, as with the recent financial crisis, you're weighing moral hazard against frozen credit markets and failing banks. Sometimes, one must pick the lesser of two evils.
  - elliekelly 8y ago
    That's not how TARP worked though. The lending arms of the major car companies as well as the mortgage arms of the major national banks were bailed out by the Federal Government effectively purchasing the "troubled assets" to remove them from the companies' books (so they wouldn't go bankrupt). The companies were bailed out but the government didn't just forgive all of that debt. People still had to pay their mortgages even if they were underwater. People still had their cars repossessed. People still had their credit ruined.
ethbro 8y ago
I'm just saying... randomized, representative democracy has a certain cachet. A voting system that supports pluralism. Then a representative system in which some proportion of those serving (e.g. 1/3) are randomly selected from within their winning party. There's a lot to be said for having more engine mechanics, farmers, teachers, etc in legislature.
Balgair 8y ago
Unfortunately (though with a heavy dose of schadenfreude), I fear the Banks are not just 'too big to fail', but have become 'too big to save'. It's been nearly a decade that they have been operating under the implicit assumption of 'too big to fail' and (without any evidence) I feel that they have taken on bets that they know are bad ones only because they know that Uncle Sam is there to bail them out. Unfortunately, even Uncle Sam isn't going to be able to save them on this one, I fear, as the bets have just gotten to lush over these years since 2008. The SEC has become completely neutered/captured and has let the leashes off. I fear that the coming bear market is going to be very very bad for all of us.

AnimalMuppet 8y ago

Unfortunately, banks going under also ruins little people like us. I thought the government did a good job with the first few institutions rescued in 2008. Their shareholders got nothing (or pennies), the management got kicked to the curb, but the institution itself survived, and took care of depositors. That's the way it should be done... except that it's disruptive, and the disruption helps further the crisis. (Jobs were lost, even if deposits weren't. Not all of the lost jobs were in the financial industry. That kind of crisis hurts little people in many different ways.) It seems to be better, even for the little people, to help before things get that far, even if it doesn't wipe out all the people we'd like to see pay for the mess they made.

richardknop 8y ago
I wonder if little people are being hurt more by the current perpetuating hegemony of the ruling class or if they would be better off if we let free market take care of this for once and let the banks fail. It would hurt but perhaps it would be better long term for the little people. All of the bad debt and Wall Street Ponzi schemes would be cleared off and a new economy which doesn’t rely on free money from government to the banks would form.
- dragontamer 8y ago
  That was what Bush did at first during 2007 / 2008. Bush let Bear Sterns and Lehman Brothers go bankrupt. Then IndyMac went bankrupt. And then... https://www.nytimes.com/2008/10/01/business/smallbusiness/01CREDIT.html https://www.nytimes.com/2008/10/01/business/smallbusiness/01... Credit Crunch. As banks fail, they closed credit-cards and other loans. My personal credit card dropped to $5,000 line (down from $10,000) for example. I don't rely on my credit card, so it wasn't a big deal. But there were lots of businesses and factories which relied upon credit to make payroll. The fundamental business was solid, but remember that Businesses in America are typically Net90 (paid 90-days after delivery). So if you had a very successful month selling things, you wouldn't be paid until 3 months later. So what do you do? You put it on a credit card, so that you can pay your workers. Too bad those credit cards failed and closed up, and all those workers had to be fired instead. ---------- If you let banks fail, then innocent businesses / people who rely upon those banks will also fail. In effect, banks hold the American People themselves hostage, as people are reliant on financial services to make payroll.

elliekelly 8y ago

Just wait until the student loan bubble bursts. Everyone is expecting some sort of student loan bailout sooner or later. Everyone will be shocked when the banks get the bailout and the students get nothing.

ethbro 8y ago
If you're bailing out the banks for writing off non-performing loans, then by definition students get their loans written off.
- richardknop 8y ago
  So students who took huge loans get scot free but a single mother who took a loan to support her two children will be left with her debt. I see no problem with that. Moral hazard and all that. Let’s just forgive all debt, what could go wrong.
  - ethbro 8y ago
    In the context of this question, my response was about a hypothetical recapitalization of banks if the student loan bubble became untenable.
    - richardknop 8y ago
      My point about moral hazard stays the same and unaddressed.
      - ethbro 8y ago
        In this hypothetical, as with the recent financial crisis, you're weighing moral hazard against frozen credit markets and failing banks. Sometimes, one must pick the lesser of two evils.
- elliekelly 8y ago
  That's not how TARP worked though. The lending arms of the major car companies as well as the mortgage arms of the major national banks were bailed out by the Federal Government effectively purchasing the "troubled assets" to remove them from the companies' books (so they wouldn't go bankrupt). The companies were bailed out but the government didn't just forgive all of that debt. People still had to pay their mortgages even if they were underwater. People still had their cars repossessed. People still had their credit ruined.

ethbro 8y ago

I'm just saying... randomized, representative democracy has a certain cachet. A voting system that supports pluralism. Then a representative system in which some proportion of those serving (e.g. 1/3) are randomly selected from within their winning party. There's a lot to be said for having more engine mechanics, farmers, teachers, etc in legislature.

Balgair 8y ago

Unfortunately (though with a heavy dose of schadenfreude), I fear the Banks are not just 'too big to fail', but have become 'too big to save'. It's been nearly a decade that they have been operating under the implicit assumption of 'too big to fail' and (without any evidence) I feel that they have taken on bets that they know are bad ones only because they know that Uncle Sam is there to bail them out. Unfortunately, even Uncle Sam isn't going to be able to save them on this one, I fear, as the bets have just gotten to lush over these years since 2008. The SEC has become completely neutered/captured and has let the leashes off. I fear that the coming bear market is going to be very very bad for all of us.