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Presuming that the theory is correct, there seems to be two sides to this: First, you're going to be transferring that money to the banks/institutions that len
by eek04 14y ago
Presuming that the theory is correct, there seems to be two sides to this:
First, you're going to be transferring that money to the banks/institutions that lend to them. So the money isn't going away, it's just ending up as profit for somebody else (as compensation for them considering themselves to be taking on more risk.)
Second, the taxpayers going to get rid of that amount of cost in the form of risk; the averaged risk is paid by the taxpayers, it is just paid in bulk when the banks are about to fail.
This assumes the calculations are all correct, and it doesn't count in what indirect cost the economy would have from loans getting a bit more expensive overall.
- damoncali 14y agoThis is the part that gets me, as I've been saying this for a while - Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009. Makes one side seem a little less important to me.
- snambi 14y agoWell, it is certainly possible. It can go from "too big to fail" to "too big to rescue". When that happens these banks, it would be disaster for many countries, not just companies.
- eplanit 14y agoExactly. "So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all?". I would want to scrutinize the calculations.