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post #1 of 33 (permalink) Old 09-20-2010, 12:44 AM Thread Starter
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One take on the financial bailouts-a good read.

Zakaria: Don't Forget That The Bailouts Worked - Newsweek

September is the month for anniversaries from hell. Last week we remembered 9/11, and this week it’s time to recall the collapse of Lehman Brothers. Most of the discussion about the financial crisis has focused on a question that won’t go away: could the fall of Lehman have been prevented? For many this was the cardinal error that sparked the crisis. Others believe that Lehman was the precipitating factor, but that the financial system was so highly leveraged that something or other would eventually have broken its back.

We will never know what would have happened if Lehman had not failed. But we can be fairly sure that without its collapse, it would have been impossible to shock the political system into action. In the month after the fall, the U.S. government made a series of massive moves to restore stability to the financial system. And it’s clear that those actions saved the American—and thus the global—economy from total collapse.

Consider the facts. After the fall of Lehman, credit froze in the U.S. economy. Banks stopped lending to anyone, even Fortune 500 companies with gold-plated credit. People couldn’t get consumer and car loans at any price, businesses couldn’t get short-term loans to meet payroll. Private-sector borrowing—the lifeblood of modern economies—fell from 15 percent of GDP in late 2007 to minus 1 percent of GDP in late 2008.

Photos: The Financial Meltdown's Best Quotes

The Financial Meltdown's Best Quotes The effects on the broader economy were immediate. GDP shrank by 6 percent in one quarter. Some 1.7 million people lost their jobs, the biggest drop in employment in 65 years, which was then exceeded in the next quarter when 2.1 million jobs evaporated. The net worth of American households decreased by $5 trillion, falling at the unprecedented rate of 30 percent a year. The worldwide numbers did not look much better. The contraction in global trade in late 2008 and early 2009 was worse than in 1929 and 1930. In other words, we were surely headed for something that looked like a Great Depression.

The U.S. government’s actions stopped the fall. Between the passage of the Troubled Asset Relief Program (TARP) and the massive quantitative easing of the Federal Reserve, markets realized that the government was backstopping the financial system, that credit was beginning to flow again, and that if no one else was going to inject capital into the system, the U.S. government would do so. Part substance, part symbolism, the effect was to restore confidence and stability to the system. In fact, the financial system bounced back so fast that the government will likely recover almost 90 percent of the funds it committed during those months, making this one of the cheapest financial bailouts in history.

The best evidence that TARP worked is that now, most people think it was unnecessary. In fact, about 60 percent of the country thinks it was a bad idea. Congressmen and senators who supported it now distance themselves; the most powerful line of attack against any of them tends to be that they voted for the bailouts. JFK said that victory has 100 fathers, and defeat is an orphan. But this is the strange case of a success that no one wants to claim.

Bank bailouts have always been unpopular. People hate to pay the bills for other people’s improvidence, and they detest having to do so for rich people. Viewed in moral terms, TARP is unconscionable. Financial institutions created the mess, and yet they were the ones being bailed out. But governance is sometimes about practical realities. Had the financial system gone under, the American economy would have come to a standstill. It very nearly did. We had to save the banks to save the economy.
The remarkable aspect of TARP, in retrospect, was the bipartisanship that made it possible. Hank Paulson and Barney Frank became comrades in arms. George W. Bush cooperated with Nancy Pelosi. Conservative Republicans endorsed a vast government appropriation. Liberal Democrats supported a bank bailout. The fact that people of wildly differing political persuasions all came to the conclusion that this was the right policy should be some proof that it was not ideologically motivated. For a moment in September 2008, Washington worked.

Alas, it won’t happen again. It took a crisis to concentrate the minds of politicians. The American system had a heart attack and we responded fast and well. Unfortunately, the problems we face in the future are less like heart attacks and more like cancer—problems that if unattended will grow and metastasize. In the long run, though, they’ll have the same effect on the patient.


Bank bailouts have always been unpopular. People hate to pay the bills for other people’s improvidence, and they detest having to do so for rich people. Viewed in moral terms, TARP is unconscionable. Financial institutions created the mess, and yet they were the ones being bailed out. But governance is sometimes about practical realities. Had the financial system gone under, the American economy would have come to a standstill. It very nearly did. We had to save the banks to save the economy.

The remarkable aspect of TARP, in retrospect, was the bipartisanship that made it possible. Hank Paulson and Barney Frank became comrades in arms. George W. Bush cooperated with Nancy Pelosi. Conservative Republicans endorsed a vast government appropriation. Liberal Democrats supported a bank bailout. The fact that people of wildly differing political persuasions all came to the conclusion that this was the right policy should be some proof that it was not ideologically motivated. For a moment in September 2008, Washington worked.

Alas, it won’t happen again. It took a crisis to concentrate the minds of politicians. The American system had a heart attack and we responded fast and well. Unfortunately, the problems we face in the future are less like heart attacks and more like cancer—problems that if unattended will grow and metastasize. In the long run, though, they’ll have the same effect on the patient.

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post #2 of 33 (permalink) Old 09-20-2010, 12:52 AM
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Re: One take on the financial bailouts-a good read.

How can that be?

Everyone knows, that we should have just let everything fail....... and we would be so much better off right now.


.

Never have so many politicians, screwed so many Americans...just to make one black person lose his job.
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post #3 of 33 (permalink) Old 09-20-2010, 03:55 AM
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Re: One take on the financial bailouts-a good read.

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Originally Posted by Suns_PSD View Post
Zakaria: Don't Forget That The Bailouts Worked - Newsweek

September is the month for anniversaries from hell. Last week we remembered 9/11, and this week it’s time to recall the collapse of Lehman Brothers. Most of the discussion about the financial crisis has focused on a question that won’t go away: could the fall of Lehman have been prevented? For many this was the cardinal error that sparked the crisis. Others believe that Lehman was the precipitating factor, but that the financial system was so highly leveraged that something or other would eventually have broken its back.

We will never know what would have happened if Lehman had not failed. But we can be fairly sure that without its collapse, it would have been impossible to shock the political system into action. In the month after the fall, the U.S. government made a series of massive moves to restore stability to the financial system. And it’s clear that those actions saved the American—and thus the global—economy from total collapse.

Consider the facts. After the fall of Lehman, credit froze in the U.S. economy. Banks stopped lending to anyone, even Fortune 500 companies with gold-plated credit. People couldn’t get consumer and car loans at any price, businesses couldn’t get short-term loans to meet payroll. Private-sector borrowing—the lifeblood of modern economies—fell from 15 percent of GDP in late 2007 to minus 1 percent of GDP in late 2008.

Photos: The Financial Meltdown's Best Quotes

The Financial Meltdown's Best Quotes The effects on the broader economy were immediate. GDP shrank by 6 percent in one quarter. Some 1.7 million people lost their jobs, the biggest drop in employment in 65 years, which was then exceeded in the next quarter when 2.1 million jobs evaporated. The net worth of American households decreased by $5 trillion, falling at the unprecedented rate of 30 percent a year. The worldwide numbers did not look much better. The contraction in global trade in late 2008 and early 2009 was worse than in 1929 and 1930. In other words, we were surely headed for something that looked like a Great Depression.

The U.S. government’s actions stopped the fall. Between the passage of the Troubled Asset Relief Program (TARP) and the massive quantitative easing of the Federal Reserve, markets realized that the government was backstopping the financial system, that credit was beginning to flow again, and that if no one else was going to inject capital into the system, the U.S. government would do so. Part substance, part symbolism, the effect was to restore confidence and stability to the system. In fact, the financial system bounced back so fast that the government will likely recover almost 90 percent of the funds it committed during those months, making this one of the cheapest financial bailouts in history.

The best evidence that TARP worked is that now, most people think it was unnecessary. In fact, about 60 percent of the country thinks it was a bad idea. Congressmen and senators who supported it now distance themselves; the most powerful line of attack against any of them tends to be that they voted for the bailouts. JFK said that victory has 100 fathers, and defeat is an orphan. But this is the strange case of a success that no one wants to claim.

Bank bailouts have always been unpopular. People hate to pay the bills for other people’s improvidence, and they detest having to do so for rich people. Viewed in moral terms, TARP is unconscionable. Financial institutions created the mess, and yet they were the ones being bailed out. But governance is sometimes about practical realities. Had the financial system gone under, the American economy would have come to a standstill. It very nearly did. We had to save the banks to save the economy.
The remarkable aspect of TARP, in retrospect, was the bipartisanship that made it possible. Hank Paulson and Barney Frank became comrades in arms. George W. Bush cooperated with Nancy Pelosi. Conservative Republicans endorsed a vast government appropriation. Liberal Democrats supported a bank bailout. The fact that people of wildly differing political persuasions all came to the conclusion that this was the right policy should be some proof that it was not ideologically motivated. For a moment in September 2008, Washington worked.

Alas, it won’t happen again. It took a crisis to concentrate the minds of politicians. The American system had a heart attack and we responded fast and well. Unfortunately, the problems we face in the future are less like heart attacks and more like cancer—problems that if unattended will grow and metastasize. In the long run, though, they’ll have the same effect on the patient.


Bank bailouts have always been unpopular. People hate to pay the bills for other people’s improvidence, and they detest having to do so for rich people. Viewed in moral terms, TARP is unconscionable. Financial institutions created the mess, and yet they were the ones being bailed out. But governance is sometimes about practical realities. Had the financial system gone under, the American economy would have come to a standstill. It very nearly did. We had to save the banks to save the economy.

The remarkable aspect of TARP, in retrospect, was the bipartisanship that made it possible. Hank Paulson and Barney Frank became comrades in arms. George W. Bush cooperated with Nancy Pelosi. Conservative Republicans endorsed a vast government appropriation. Liberal Democrats supported a bank bailout. The fact that people of wildly differing political persuasions all came to the conclusion that this was the right policy should be some proof that it was not ideologically motivated. For a moment in September 2008, Washington worked.

Alas, it won’t happen again. It took a crisis to concentrate the minds of politicians. The American system had a heart attack and we responded fast and well. Unfortunately, the problems we face in the future are less like heart attacks and more like cancer—problems that if unattended will grow and metastasize. In the long run, though, they’ll have the same effect on the patient.
It was BS the first time, we didn't need to post the same BS again. The fact that it held the finacial system at a stand still, it still is. Nothing has changed. What is Unemployment again? How much does GM still owe us? Oh wait that is right, they paid it back in full

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How can that be?

Everyone knows, that we should have just let everything fail....... and we would be so much better off right now.


.
How can you prove that we wouldn't be in the same spot as we are right now without the bailouts? Again what is the Unemployment rate today from a year ago?

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post #4 of 33 (permalink) Old 09-20-2010, 05:35 AM
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Re: One take on the financial bailouts-a good read.

Instead of TARP, I would have preferred that the government handled the failed financial institutions the way they did during the S & L crisis of the 1980's.

http://en.wikipedia.org/wiki/Resolut...st_Corporation

This would have kept the scumbags who precipitated the financial crisis from keeping their jobs and continuing to make unwarranted bonuses off the backs of the American Taxpayer, while at the same time backstopping the financial system.

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post #5 of 33 (permalink) Old 09-20-2010, 12:38 PM
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Re: One take on the financial bailouts-a good read.

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Instead of TARP, I would have preferred that the government handled the failed financial institutions the way they did during the S & L crisis of the 1980's.

http://en.wikipedia.org/wiki/Resolut...st_Corporation

This would have kept the scumbags who precipitated the financial crisis from keeping their jobs and continuing to make unwarranted bonuses off the backs of the American Taxpayer, while at the same time backstopping the financial system.
I agree that letting the people who were responsible stay in their positions, is just asking for more of the same at a later date.

Then again, look at all of the outrage toward Obama when he made the head of GM step down.

The way I see it is, if you screwed up so bad that the Federal government has to bail you out.....you shouldn't be able to stay.


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Never have so many politicians, screwed so many Americans...just to make one black person lose his job.
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post #6 of 33 (permalink) Old 09-20-2010, 12:42 PM
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Re: One take on the financial bailouts-a good read.

If they really wanted to stimulate the economy, they would have given the money back to the taxpayers. Or they could have given every man woman and child in the country $3,333 with the trillion dollars they wasted. They would have also let the banks and companies who took the unnecessary risk fail, but they realized that they forced the banks to take many of those risk, so it was more about covering their ass than helping the banks. They still have not even spent half of the stimulus money, and they are asking for more and more. A lot of that money has gone to the unions, who now plan to spend it by giving it back to the politicians who got it for them. Government steals the money from me, gives it to unions that I don't support, who then gives it back to the politicians who I don't support so that they stay in power to do it all over again. This is the communist/socialist way of forcing me to fund their campaigns/political careers and they think that we're too stupid to figure out what's going on. Can't wait for November. I encourage everyone who reads this to google the communist manifesto, and tell me our government isn't following it almost to a T, unbelievable. or follow link

http://www.libertyzone.com/Communist...to-Planks.html
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post #7 of 33 (permalink) Old 09-20-2010, 12:50 PM
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Re: One take on the financial bailouts-a good read.

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It was BS the first time, we didn't need to post the same BS again. The fact that it held the finacial system at a stand still, it still is. Nothing has changed. What is Unemployment again? How much does GM still owe us? Oh wait that is right, they paid it back in full.
I think you're being obtuse on purpose.

Other than you, who has said that GM has paid us back "in full?"

They paid back $6.7 Billion of the $50 Billion (mostly by borrowing against their government line of credit).



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How can you prove that we wouldn't be in the same spot as we are right now without the bailouts?
Obviously.... no one can.

However, the vast majority of economists say that we wouldn't.

I think I'll believe them....and not you.



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Again what is the Unemployment rate today from a year ago?
Which proves what?

That the economy is bad? Gee, who is arguing that?

The real question is..... How much worse could it be?


.

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post #8 of 33 (permalink) Old 09-20-2010, 01:07 PM
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Re: One take on the financial bailouts-a good read.

Unless Paul Krugman is the vast majority of economists Rick I dont think so

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post #9 of 33 (permalink) Old 09-20-2010, 05:06 PM Thread Starter
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Re: One take on the financial bailouts-a good read.

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They would have also let the banks and companies who took the unnecessary risk fail, but they realized that they forced the banks to take many of those risk, so it was more about covering their ass than helping the banks. They still have not even spent half of the stimulus money, and they are asking for more and more.
The USA would have lost millions of manufacturing jobs permanently if GM had been allowed to go under. Instead this great American company is now profitable again. I don't see how this could be considered a bad thing. Just the taxable income off of the millions of saved jobs and homes pays for GM's bailout 100 fold.

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post #10 of 33 (permalink) Old 09-20-2010, 05:25 PM
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Re: One take on the financial bailouts-a good read.

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The USA would have lost millions of manufacturing jobs permanently if GM had been allowed to go under. Instead this great American company is now profitable again. I don't see how this could be considered a bad thing. Just the taxable income off of the millions of saved jobs and homes pays for GM's bailout 100 fold.
GM did fail, they failed to make a profitable business model and just sucked out every last penny they could.

The question is would GM have disolved had they not been given the bailout.

I don't think they would have, there is entirely too much revenue for investors to ignore.

Someone would have picked up the business.

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