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Goldman and Morgan would not have survived without government intervention. My preferred intervention would have been to nationalize the companies and fire all
by guelo 12y ago
Goldman and Morgan would not have survived without government intervention. My preferred intervention would have been to nationalize the companies and fire all the executives. But the intervention that we got was that money was shoveled into the companies until the executives could start paying themselves giant bonuses again.
- ahomescu1 12y ago> My preferred intervention would have been to nationalize the companies and fire all the executives. ...and replace them with politically-connected cronies? That's what usually happens for nationalizations.
- crdoconnor 12y agoDidn't happen in Sweden. They followed this policy successfully and it worked out great for them (back to growth a year or two later; banks healed).
- wheaties 12y agoThey wouldn't have survived? Based on what evidence? They had already liquidated the majority of their bad debt and hedged away more of the risk onto their own clients by the time TARP came around.
- autokad 12y agogoldman bought tons of insurance on bad loans (loans it didnt own). it was gambling they would go bad, but part of that gamble was that the issuer (AIG for example) could pay up. they couldnt, until the government stepped in and made sure that 100 cents to the dollar was paid on those gambling notes. without that, goldman would have failed
- inthewoods 12y agoThe key question is why it was at 100 cents on the dollar - most cases would have required a haircut.