Nope, I want to make sure it never happens again. Teach the banks a lesson they will never forget instead of giving them more cash and praying for the best.
Can you imagine if you laundered money from a drug dealer, starved your neighbour by buying up all the food from a grocery store, and committed massive fraud, and still got money from the government just because you were too big to fail? Then claiming the moral high ground, because hell, you've always been too big to fail?
Poor analogy. A better analogy would be this: A shady stranger asks you for $1000. You give it to him and he buys a stereo, yada yada. You know full well the risk of loaning to someone that has a history (or lack of history). Yet in the pursuit of wealth you take a foolish risk and lose. This is not even a case of loaning. This is just straight up gambling.
But why does the shady stranger get to keep the stereo if he can't pay you back? Especially if he signed a lending contact to that effect. If I pay a kid $20 to mow my lawn and he doesn't
Sure. But nobody is expecting you to claim it since you had such an idiotic lapse in judgement. Banks can afford to make these risks, but when they're doing in en masse then we've got a problem. And its not like the banks are the only ones hurting. This massive debt is affecting the entire economy... except for the rich (directly).
You're the one endorsing too big to fail, you said earlier the taxpayer should back loans to prevent banks from failing. If you just let the banks fail they won't issue bad loans because they won't exist. Problem solved.
Look, let's face it, 2008 was a sh**ty situation. Someone was going to have to get money they didn't deserve. Whether or not that was the banks or the people, well, that debate was never as fully enunciated as it could have been.
Going the full high-risk route instead of the balance of blue-chip with high-risk. If someone lost all their money in the stock market that way, it'd be clear to see who's at fault there. Regardless, if we keep stalemating here nobody will win.
I endorsed the salvation of the financial system---and then strict regulation to take the wings off the resulting too big to fail status of banks, including a possible breakup of the banks. This would be the same thing, except even better because the system could stay afloat, and the banks could be punished immediately. Unfortunately, we must compromise on the fine points. The Great Depression may have taught a lot of people valuable lessons...but they only lasted for fifty years. A decade of absolute heart-wrenching pain, just to watch it all go down in the Reagen years? Yeah, not appealing.
I don't think it would work well at all. It penalizes everyone who owned their homes outright while rewarding people that bought places they shouldn't have. What about the banks that did give out reasonable loans? What about the borrowers that took out loans planning to flip their property out of pure greed? Something like 90% of mortgages are doing just fine. Why, as a bank, would you EVER lend money again to anyone for any reason if there are no rules? Basically, you're saying that because some banks were bad, let's kill all the banks. And because some borrowers got screwed, let's reward them all. It's about as dumb a solution to a problem as anyone could come up with.
That's true - we, as a country, have been living beyond our means for decades and that will take time to fix. There's no way around that. That doesn't change the fact that there are some solutions that are dumber than others, though.
Very good post. I can let RedRedemption's posts slide, because he is not an economics student and clearly just posting from his gut, but for Northside Storm, a self-proclaimed "economist" to post all the nonsense he has been posting is quite embarrassing.
