@okie,
okie wrote:
We are told that not propping up these banks would cause a meltdown, but I would like to see more proof that this would happen. Insured accounts should be backed up
Dude. Who do you think 'backs up' those insured accounts? The FDIC, which doesn't have 1/100th of the money that they would need in order to cover those accounts. Major bank failures simultaneously are not 'coverable,' outside of doing exactly what we did - bailing everyone out. But then, the banks would all be dead at the same time. Spending similar amounts of money, with nothing at all to show for it.
There was a very, very good chance that YOUR money would have disappeared right out of your accounts; and your investments could have tanked much, much worse than they did last Fall. It was a big risk to take, just to do nothing and let the chips fall where they may. I understand the attraction to do this; I am young, healthy, no kids no responsibility other than me and the wife. I could probably ride out a long depression without having it destroy my life. Many others, however, are already in tough situations and things could have been disastrous.
Quote:but why should the taxpayer be obligated to bail out uninsured and risky investments that were just bad business practice? Failure in every other business weeds out the bad apples, the inferior companies and services, and propping up bad business practices appears to me to not solve the problem but instead propagate it.
I partially agree, but there is compelling evidence that the US was in danger of entering a Depression instead of a Recession by allowing all those companies to fail simultaneously. Plus GM, plus all their suppliers. Job losses likely would have been ridiculously bad.
Quote:I could be wrong on this, but I am a skeptic in regard to this, I would like to see more evidence that allowing failures would be worse than we the taxpayers incurring another few hundreds of billions of debt.
What sort of evidence would convince you?
Quote:After all, it appears to punish everyone when it wasn't everyone that was involved in substandard and irresponsible financial practices. Let the ones that were bear most of the consequences. And for every bank or business that goes broke, there are others to replace them, but they usually learn by example and correct their mistakes. As it is, here we are propping up these failed businesses, having to tell them to cut salaries, etc., when they should already know this.
You're right, they should. I am quite pleased to see that you are now placing the blame where it belongs, ie., on those who made the bad investments, instead of somehow blaming the Government for the crisis.
Quote:Another point about salaries, where is the outrage over the compensations in Fannie and Freddie, and the corruption. Example Franklin Raines and his 90 million or whatever it was, still walks free as a bird without having to even answer very serious questions before Congress. I see a double standard here.
I don't disagree with that, either. I have no special love for anyone who was involved with the Fannie and Freddie mess.
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The key now is to support regulations which can help keep these problems from happening in the future, while retaining the free market system which leads to prosperity. And if you'd like to discuss these regulations and financial ideas, I would be interested in doing so.
Cycloptichorn
