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akuma587 on 19 April 2009
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HappySqurriel said:
akuma587 said:

American stupidity and foolhardiness with their money is one thing you can count on always Kasz. Consumer spending has already started to pick up.

And you bring up a perfectly good point with the FDIC. If all these banks did fail, the government would be on the hook for EVERY BANK ACCOUNT that failed along with them. That amount is probably higher than the amount paid out to bail out the banks. And the bailout money can at least be paid back (and some banks are already starting to pay it back http://www.abcnews.go.com/Business/Politics/Story?id=7337061&page=1 ). The government would probably have had to spend MORE money if it hadn't bailed out the banks than if it had let them fail and the FDIC would have had to step in.

So anyway you look at it, the government was going to be paying out a shitload of money. To claim that we would have spent less money if we wouldn't have bailed out the banks is extremely myopic.

 

 

They're only on "the hook" if they can't recover the deposit money through bankrupcy, and (while I could be wrong) I suspect that the FDIC becomes one of the first creditors that is repaid when a bank fails ...

Some of these banks were so overleveraged it was frightening.  Some of them had a 30:1 liability to asset ratio.  If the government had to salvage what was left of a bank like that, there might not be very much left.  Now amplify that to 5-10 large financial institutions going under whose assets are inextricably tied together.  You really think any of their assets are going to be worth anything when the banks that owe them money have also gone bankrupt?

This same thing would ripple outwards to the foreign banks as well if their governments hadn't stepped in to increase their liquidity.  Its like having a deck of cards where you start burning up all the individual cards.  No one wants the deck of cards anymore if half the cards are missing.

 



We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls.  The only thing that really worried me was the ether.  There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke

It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...."  Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson