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In reply to the discussion: Remember George Bailey? [View all]ieoeja
(9,748 posts)21. It took a bailout to save his S&L.
Bail outs are actually one possible implemention of Keyensian economics. We mostly think of Keyensian economics as injecting cash into the economy by building publicly owned infrastructure. Infusing cash into privately owned infrastructure can also help.
2008 flashback
When GW Bush announced the bank bailout, he had a deers-caught-in-the-headlights look as he bumbled and stumbled over his words. Conversely, when talking about killing, his English was always flawless. GW had no problem talking when he believed in what he was saying.
Watching him read his lines regarding the bailout, I remember turning to the guy next to me and saying, "he doesn't agree with a word he said."
GW seems to have been a true believer. True believers in the free market would let the banks collapse. If you ever needed proof that GW was never his own man, the bank bailout is it.
Obama supported the bailouts. McCain opposed them. And one of these two men has been doing a remarkably good job lately of proving what a complete imbecile he is.
That said, the bailout was mishandled in many ways. It made perfect sense to loan big banks money so they could, in turn, loan money to smaller banks then all banks could loan money to people and businesses keeping the entire economy moving. The big banks already had the infrastructure in place to handle a large distribution of cash in that manner. Why not take advantage of it?
Problem is, they didn't put it in writing. They were working with an entire industry which believes that greed is good, and they thought they could broker this deal with a handshake? If you ever needed a reminder that the sole requirement for a politician is the ability to win popularity contests ... here it is!
Instead of loaning to the small banks, the big banks held onto the money starving out those smaller banks then using the money we loaned them to go on an eating binge of smaller banks.
Even without the original agreement in writing, our government could have stepped in and done something about it after the fact. But they chose not to. The distraction of an election may have helped.
Other problems.
Any bank "too big to fail" is too big to exist. Had there been no failure yet, that would still be true. Because it will inevitably be a problem. And since we are still ignoring this fact ... it is going to happen again. Problem still fixable. Problem still ignored.
The entire mortgage derivative concept needs to be eliminated. Mortgages should not be split up. Nor should they be bundled. Problem still fixable. Problem still ignored.
Investment banking and commercial banking need to be re-separated. Investment bankers should not be allowed to put our savings at risk, only what we choose to risk. The Countrywide guy who broke up Glass-Steagal has admitted to making the same mistake our pols made in trusting the investment bankers. Coming from the commerical side, he viewed banks as institutions that safeguard people's savings. He was essentially booted out after the merger for opposing the huge bonuses and other excesses he encountered upon joining the investment bankers. Problem still fixable. Problem still ignored.
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thank you for sharing this--a quote that should be in the offices of EVERY CEO and politician and
niyad
Nov 2012
#6
"He would be called a 'bleeding heart liberal' by conservatives." And "fucking retarded" by Rahm.
AnotherMcIntosh
Nov 2012
#16