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> How, exactly? What "long term decisions" would not have been worse off if the 2008 bailouts hadn't been made and a large chunk of Western retail banking had g

> How, exactly? What "long term decisions" would not have been worse off if the 2008 bailouts hadn't been made and a large chunk of Western retail banking had gone insolvent, tying up accounts until it could have been resolved? There is an important difference between "this business is no longer viable", and "this business is perfectly viable in the future but is experiencing a temporary shock which its cashflow and trade credit cannot cover". I think that OP is referring to people who have decisions that would help them weather a bad storm such as 2008 or the pandemic. Let’s say I’m a small bank that is extra extra conservative with my balance sheet and only makes responsible loans, etc. In theory, 2008 or 2020 comes along and my business is hurt but I’m still fine because of my caution. And long term I am in a great position because my competitors are soon going out of business... except they aren’t because the government props them up. This is essentially what’s happening to Warren Buffett right now who has a war chest is billions of dollars saved up during the good times that he’s ready to invest now. But it’s not as viable a strategy because the government props everyone up. Yes, a lot of these are viable businesses in the long term if they can just be helped now. But if the government protects them on the downside many would argue that they should get more of a share of the upside as well.

MichaelMcG 6y ago
> This is essentially what’s happening to Warren Buffett right now who has a war chest is billions of dollars saved up during the good times that he’s ready to invest now. But it’s not as viable a strategy because the government props everyone up. In all fairness, Berkshire Hathaway stepped in to bailout Bank of America. It obviously paid out handsomely for Buffett and Co. long term, just find it interesting to use as an example.
- aphextron 6y ago
  >In all fairness, Berkshire Hathaway stepped in to bailout Bank of America. It obviously paid out handsomely for Buffett and Co. long term, just find it interesting to use as an example. Private capital does not "bail out" companies. That's called an investment.
  - MichaelMcG 6y ago
    I agree, I mixed up BoA with Goldman. Instead should have mentioned his investment in Goldman--not BoA--during the financial crisis, which he did counting on the bailout that was passed shortly after. I don't believe it's too much of a leap to conclude that back in 2008 it was as close as possible to a joint effort between BRK/Goldman/the-financial-powers-that-be to minimize the total obligation GS would have to the Treasury from TARP funds. Read somewhere the TARP investment was repaid 8 months later by GS with 23% interest, whereas they repurchased BRK's preferred stock for a 10% premium in 2011. BRK's warrant redemption in 2013 is another story, but easier for GS to account for long term.

MichaelMcG 6y ago

> This is essentially what’s happening to Warren Buffett right now who has a war chest is billions of dollars saved up during the good times that he’s ready to invest now. But it’s not as viable a strategy because the government props everyone up. In all fairness, Berkshire Hathaway stepped in to bailout Bank of America. It obviously paid out handsomely for Buffett and Co. long term, just find it interesting to use as an example.

aphextron 6y ago
>In all fairness, Berkshire Hathaway stepped in to bailout Bank of America. It obviously paid out handsomely for Buffett and Co. long term, just find it interesting to use as an example. Private capital does not "bail out" companies. That's called an investment.
- MichaelMcG 6y ago
  I agree, I mixed up BoA with Goldman. Instead should have mentioned his investment in Goldman--not BoA--during the financial crisis, which he did counting on the bailout that was passed shortly after. I don't believe it's too much of a leap to conclude that back in 2008 it was as close as possible to a joint effort between BRK/Goldman/the-financial-powers-that-be to minimize the total obligation GS would have to the Treasury from TARP funds. Read somewhere the TARP investment was repaid 8 months later by GS with 23% interest, whereas they repurchased BRK's preferred stock for a 10% premium in 2011. BRK's warrant redemption in 2013 is another story, but easier for GS to account for long term.