1. Welcome! Please take a few seconds to create your free account to post threads, make some friends, remove a few ads while surfing and much more. ClutchFans has been bringing fans together to talk Houston Sports since 1996. Join us!

What if we let them all fail?

Discussion in 'BBS Hangout: Debate & Discussion' started by Nolen, Dec 8, 2008.

  1. Nolen

    Nolen Member

    Joined:
    Feb 15, 1999
    Messages:
    2,718
    Likes Received:
    1,261
    Libertarians, help me out here. This question is not rhetorical, I sincerely want to be educated on this. I apologize if this has already been discussed too much but I think there hasn't been enough discussion of this specific topic.

    I've been reading about Peter Schiff and other purist libertarians like Ron Paul who believe we should have no government bailout for any industry whatsoever. No bailouts, no economic stimulus plans, nada.

    This is appealing in a vengeful sense because we finally see incompetence/evil rewarded. It is terrifying in another sense becuase, sh**, what would happen?

    So let's say we allow AIG, WaMu, Citibank, GM, and others fail. What happens? Somebody walk me through this, because I just don't know. When a bank "fails," what happens to it's remaining assets? And what happens to my money? Surely the FDIC couldn't possibly cover all of the losses. There would be a ripple effect and more banks would fail... would we have worldwide financial collapse? What does that even mean? Does money just disappear?

    In your opinion, what would the world look like right now if we had no bailouts? And what would happen in the future? Do we recover? How? Ron Paul and others say we need this "adjustment." This recession has to happen. Bailouts and stimulus packages just delay the pain. So, logically, that means that if we let all these companies fail, we would recover quicker? This doesn't make sense to me. How does that work? We hurt more, but for a shorter time.... why?

    This has been on my mind for weeks, your help is appreciated.
     
  2. Northside Storm

    Joined:
    Dec 24, 2007
    Messages:
    11,262
    Likes Received:
    450
    The current crisis has less to do with tangible assets then with the intangible; mostly everyone's trouble is that there is a confidence crisis after all those investment banks were caught playing with ridiculous debt levels and stupid risks. Trust me, that would get MUCH worse if well, everything collapsed. The main trouble right now is that the banks are tight as hell with their money. That would only get tighter, as you could imagine, if the current economic atmosphere gets even worse, which would lead to layoffs, less consuming, more layoffs...etc. etc...economic down spiral until we all live in caves, if you're talking about no intervention at all.

    Ron Paul is an idiot. Anybody with a working knowledge of macroeconomics knows you can't just let the economy dictate itself into disaster.
     
  3. Bullard4Life

    Bullard4Life Member

    Joined:
    Aug 11, 2001
    Messages:
    1,470
    Likes Received:
    1
    [​IMG]
     
  4. Invisible Fan

    Invisible Fan Member

    Joined:
    Dec 5, 2001
    Messages:
    43,933
    Likes Received:
    25,843
    Libertarians have been deluded by the size of its support base when corporate shills and its lobbyists secretly propped up its cause to privatize profits. Now, when losses are socialized, those lone libertarians might look intellectually consistent, but that collapse of support isolates them into the fringe.

    My opinion is that our system was never purely libertarian, so pursuing one now wouldn't be politically or economically feasible. It takes a certain faith and culture to believe in an economic system. We think we can hang, but we really can't.
     
  5. MoonDogg

    MoonDogg Member

    Joined:
    Nov 12, 1999
    Messages:
    5,167
    Likes Received:
    495
    yeah, like Jon Koncak....
     
  6. robbie380

    robbie380 ლ(▀̿Ĺ̯▀̿ ̿ლ)
    Supporting Member

    Joined:
    Aug 16, 2002
    Messages:
    23,418
    Likes Received:
    9,964
    they will all fail eventually because the backstop for all this garbage won't be able to sustain itself.
     
  7. BetterThanEver

    Joined:
    Oct 9, 2007
    Messages:
    9,931
    Likes Received:
    189
    Economy would collapse further down and faster. The regional banks would be buying out many other banks, laying off the employees, and keeping the assets.

    As we go through the 2nd great depression with massive layoffs in manufacturing and the service sector, there will be a surge in crime. The surge will be made even worse, because of cities laying off police due to the drop in tax revenue and lack of funding.

    AIG, WAMU, and Indymac's assets would be sold off in pieces to pennies on the dollar to regional banks and foreign investors.

    It would really suck.
     
  8. Dubious

    Dubious Member

    Joined:
    Jun 18, 2001
    Messages:
    18,317
    Likes Received:
    5,089
    Americans are used to a quality of life based on a functioning credit system and a relatively high wage for workers. In light of the global nature of competition for labor wages the model is probably not sustainable over the long run. With global competition, the worldwide standard of living will approach the mean; poorer countries willing to submit to exploitation will live better, richer countries with organized labor and health and safety standards will trend poorer.

    The common good of the American people will not be served by a calamitous failure or by the business as usual approach. We have to use out collective resources to save the system we have developed and that has served us fairly well up to this point. But we have to use the mood of crisis and leverage of government assistance to redirect our economy into a smarter, fairer, more efficient system. The old story of risk/reward in the private sector is probably dead in the macro scale. The future is probably more regulated risks and muted rewards; and a system wide reduced quality of life.

    If that sounds like an argument for socialism over capitalism it's not because I wish it to happen. I just think the at this point in history, the pendulum has changed direction.
     
  9. glynch

    glynch Member

    Joined:
    Dec 1, 2000
    Messages:
    17,856
    Likes Received:
    3,433
    Interesting comment about the typical old wealthy country club folks pushing libertarianism. It is certainly in their interests.

    The fanaticism of libertarians in devotion to their abstract theory of a utopia reminds me of the Marxist Leninists of the old communist system. .

    Just as it is a tough time to be a Marxist Leninist it is a tough time to be a libertarian. I imagine a few are losing the faith, though a few will undoubtedly claim we came to the present crisis because there was too much government regulation of the financial markets and the only regulation needed is to limit the money supply to the gold supply or somesuch.
     
  10. fmullegun

    fmullegun Contributing Member

    Joined:
    Oct 24, 2008
    Messages:
    3,279
    Likes Received:
    23
    you cannot allow AIG to fail. We don't have enough money to cover that loss.
     
  11. russian88

    russian88 Member

    Joined:
    Sep 12, 2005
    Messages:
    739
    Likes Received:
    1
    [​IMG]

    If it fails.........it fails
     
  12. Invisible Fan

    Invisible Fan Member

    Joined:
    Dec 5, 2001
    Messages:
    43,933
    Likes Received:
    25,843
  13. bingsha10

    bingsha10 Member

    Joined:
    Nov 12, 2006
    Messages:
    3,129
    Likes Received:
    334
    that all sounds great and all until you realize that all that great depression talk IS going to happen eventually whether you like it or not if we keep doing what we are doing.

    the fundamental question is: where is the money going to come from?

    either by borrowing (what we have been doing) or printing it (what we will be doing in the future if other countries lose confidence in our economy we can't borrow more. That is a big IF but it certaintly is conceivable given how much they've already lost). and hyperinflation here we come. Guess what that does to employment?

    until we get our import export ratio to something more even than it is now the problem is going to get worse.

    I blame China for fixing their exchange rate to ours which doesn't allow us to sell stuff cheaply in that market.
     
  14. Astro101

    Astro101 Member

    Joined:
    Jul 1, 2002
    Messages:
    2,068
    Likes Received:
    2
    I don't know if I see Libertarians losing faith. If anything most I've seen are even stronger now. Many are in the "I told you so" category. When I see people like Peter Schiff talking a few years ago about how this country will be in an economic crisis (and ending up being right) and everyone else laughing at him, why wouldn't I trust him at this point in time?
     
  15. Mathloom

    Mathloom Shameless Optimist
    Supporting Member

    Joined:
    Oct 4, 2008
    Messages:
    18,707
    Likes Received:
    19,057
    I don't understand why cash is given to the people who played with debt too much. Shouldn't money go to those who were smart and did not? Shouldn't the ones who made a mistake cease to exist because of their incompetence?

    I really don't buy it. The problems will be delayed to the next generation. Inflation will eat them alive. In fact, the next guy who's dealing with too much debt will factor in the possibility of receiving bailout money in case of failure and take on even more risk/debt.

    Only banks require bailout money. Car manufacturers do NOT require anything. Banks are saving your money and lending other people money. They are an intermediary and they will come closer to that definition after all is said and done. GM, Ford and Chrysler should go down if they cant save themselves.

    The systemic risk exists in the financial sector only - specifically where retail banking is involved.
     
  16. Red Chocolate

    Red Chocolate Member

    Joined:
    May 29, 2001
    Messages:
    1,576
    Likes Received:
    309
    god forbid we have... capitalism?

    but but.. people CAN NOT be self-sufficient and rely on their local communities and state instead of the federal government. We must waste money on worthless federal programs which trickle up to the corrupt. but but.. Ron paul is a nutjob though. See you all in the soup lines.
     
  17. Rashmon

    Rashmon Member

    Joined:
    Jun 2, 2000
    Messages:
    19,746
    Likes Received:
    15,286
    The reason Libertarians never get any real traction in the political world is that the bottom line is that Libertarian ideology, would likely lead to economic totalitarianism.


    "There isn't much point arguing about the word "libertarian." It would make about as much sense to argue with an unreconstructed Stalinist about the word "democracy" -- recall that they called what they'd constructed "peoples' democracies." The weird offshoot of ultra-right individualist anarchism that is called "libertarian" here happens to amount to advocacy of perhaps the worst kind of imaginable tyranny, namely unaccountable private tyranny. If they want to call that "libertarian," fine; after all, Stalin called his system "democratic." But why bother arguing about it? "
    Noam Chomsky
     
  18. pirc1

    pirc1 Member

    Joined:
    Dec 9, 2002
    Messages:
    13,976
    Likes Received:
    1,702
    If you think it is bad now it would be much worse if we have Libertarians in charge for a significant period of time.
     
  19. Red Chocolate

    Red Chocolate Member

    Joined:
    May 29, 2001
    Messages:
    1,576
    Likes Received:
    309
    Yeah no joke, we'd have to actually abide by the Constitution and cut down on frivolous government spending. We wouldn't have the Federal Reserve banks or the Income Tax and that would just be the end of the world. Turn your computers off and go back to sleep, sheeple.
     
  20. Air Langhi

    Air Langhi Contributing Member

    Joined:
    Aug 26, 2000
    Messages:
    21,664
    Likes Received:
    6,298
    What were we going to do to solve this problem. Its a long time coming.
     

Share This Page

  • About ClutchFans

    Since 1996, ClutchFans has been loud and proud covering the Houston Rockets, helping set an industry standard for team fan sites. The forums have been a home for Houston sports fans as well as basketball fanatics around the globe.

  • Support ClutchFans!

    If you find that ClutchFans is a valuable resource for you, please consider becoming a Supporting Member. Supporting Members can upload photos and attachments directly to their posts, customize their user title and more. Gold Supporters see zero ads!


    Upgrade Now