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And yet again the cleanest method would be to not bail out the banks and let the assets be actioned to the highest bidder. Everything else is trading off long t

And yet again the cleanest method would be to not bail out the banks and let the assets be actioned to the highest bidder. Everything else is trading off long term efficient ressource allocation in favor of short term stability.

rodgerd 6y ago
Funny how it's a moral hazard to bail out individuals weighed down by debt, but an economic necessity to bail out millionaires and billionaires who didn't do their risk analysis.
- int_19h 6y ago
  Or maybe they did do their risk analysis, and incorporated the likelihood of getting bailed out into that?
  - munk-a 6y ago
    At this point they'd be fiscally irresponsible if they didn't assume a certain level of bailing out - and they're likely "investing" in relations with various senators and representatives to make sure their name is on the list of those eligible for the bailouts.
- simonh 6y ago
  I agree bailouts should not benefit shareholders, but it can be pragmatic to rescue businesses, including banks, that are systemically important. That may mean the government temporarily assuming equity in, or ownership of the enterprise. The important thing is that it's the interests of the economy that are being safeguarded, not those of investors.
munk-a 6y ago
That would cause a massive economic disruption that could potentially lead to actually bad economic effects. Right now things aren't all sunny and happy for everyone but they can get a lot worse if infrastructural components of the economy start getting eroded - either by being chopped up for vulture capitalists or by having their lending chain & backers divided up similarly. If Fedex & UPS were to be forced to sell off package delivery in NYC to cover losses while USPS continues to be hamstrung by the administration then things will get bad - and there are a lot of other operators that are a lot less visible but just as essential. Let slip retailers and banks are less stable - let slip banks and companies that are operating through the pandemic on shoe-strings and a whole bunch of backed credits lose the ability to keep the lights on.
- linuxftw 6y ago
  > If Fedex & UPS were to be forced to sell off package delivery in NYC Then the market will adjust. If you can't get packages delivered in NYC, you will have to get your goods through some other means. Maybe all of NYC is a bubble. Maybe that many people shouldn't live on a handful of tiny islands, importing their food from the mid west and their goods from China. Maybe everyone's in the wrong place.
  - PaulDavisThe1st 6y ago
    Maybe. But if that's true, is the correct solution to crash-and-burn from the current scenario to some version of a "better" one?
    - linuxftw 6y ago
      The correct thing to do is let the market decide. If it's profitable to do something, people will do it.
      - PaulDavisThe1st 6y ago
        This seems profoundly naive to me. "If it's profitable do something" is beyond simplistic. Profitable compared to what? Profitable for whom? Profitable based on what assumptions? Profitable by what metric? Dollars accrued to capital? Dollars accrued to GDP? Quality of life index? Happiness index? Life expectancy numbers? Infant mortality? Profitable with what externalities forced to be part of cost-factoring? What is "the market"? What is a "decision" in this context? What is the cost benefit analysis of allowing "the market" to "decide" versus more policy-driven unfolding of the outcome? ... and so on and so on .... i.e. the usual litany of problems with free-market boosterism
        lmm 6y ago
        To refuse to decide is even more simplistic. The free market offers a clear way to decide where resources are invested. If you're going to override that and prop up failing companies, what grounds are you going to use to decide, and why do you believe your process will be better? Letting the market decide at least ensures that completely useless companies go to the wall, and companies that people are willing to spend a lot on get to continue (and, notably, it does this in a nondiscriminatory way - anyone's money is as good as anyone else's). Can your process - which is, what, Trump picks and chooses which companies don't go bankrupt? - guarantee that much?

rodgerd 6y ago

Funny how it's a moral hazard to bail out individuals weighed down by debt, but an economic necessity to bail out millionaires and billionaires who didn't do their risk analysis.

int_19h 6y ago
Or maybe they did do their risk analysis, and incorporated the likelihood of getting bailed out into that?
- munk-a 6y ago
  At this point they'd be fiscally irresponsible if they didn't assume a certain level of bailing out - and they're likely "investing" in relations with various senators and representatives to make sure their name is on the list of those eligible for the bailouts.
simonh 6y ago
I agree bailouts should not benefit shareholders, but it can be pragmatic to rescue businesses, including banks, that are systemically important. That may mean the government temporarily assuming equity in, or ownership of the enterprise. The important thing is that it's the interests of the economy that are being safeguarded, not those of investors.

munk-a 6y ago

That would cause a massive economic disruption that could potentially lead to actually bad economic effects. Right now things aren't all sunny and happy for everyone but they can get a lot worse if infrastructural components of the economy start getting eroded - either by being chopped up for vulture capitalists or by having their lending chain & backers divided up similarly. If Fedex & UPS were to be forced to sell off package delivery in NYC to cover losses while USPS continues to be hamstrung by the administration then things will get bad - and there are a lot of other operators that are a lot less visible but just as essential. Let slip retailers and banks are less stable - let slip banks and companies that are operating through the pandemic on shoe-strings and a whole bunch of backed credits lose the ability to keep the lights on.

linuxftw 6y ago
> If Fedex & UPS were to be forced to sell off package delivery in NYC Then the market will adjust. If you can't get packages delivered in NYC, you will have to get your goods through some other means. Maybe all of NYC is a bubble. Maybe that many people shouldn't live on a handful of tiny islands, importing their food from the mid west and their goods from China. Maybe everyone's in the wrong place.
- PaulDavisThe1st 6y ago
  Maybe. But if that's true, is the correct solution to crash-and-burn from the current scenario to some version of a "better" one?
  - linuxftw 6y ago
    The correct thing to do is let the market decide. If it's profitable to do something, people will do it.
    - PaulDavisThe1st 6y ago
      This seems profoundly naive to me. "If it's profitable do something" is beyond simplistic. Profitable compared to what? Profitable for whom? Profitable based on what assumptions? Profitable by what metric? Dollars accrued to capital? Dollars accrued to GDP? Quality of life index? Happiness index? Life expectancy numbers? Infant mortality? Profitable with what externalities forced to be part of cost-factoring? What is "the market"? What is a "decision" in this context? What is the cost benefit analysis of allowing "the market" to "decide" versus more policy-driven unfolding of the outcome? ... and so on and so on .... i.e. the usual litany of problems with free-market boosterism
      - lmm 6y ago
        To refuse to decide is even more simplistic. The free market offers a clear way to decide where resources are invested. If you're going to override that and prop up failing companies, what grounds are you going to use to decide, and why do you believe your process will be better? Letting the market decide at least ensures that completely useless companies go to the wall, and companies that people are willing to spend a lot on get to continue (and, notably, it does this in a nondiscriminatory way - anyone's money is as good as anyone else's). Can your process - which is, what, Trump picks and chooses which companies don't go bankrupt? - guarantee that much?