HappySqurriel said:
Realistically, the unemployment rate couldn't have gone much higher (at least for any significant amount of time) ... If the banks were allowed to fail the mortgage backed securities that were "worthless" would probably have ended up selling for a tiny fraction of what their book value was. Small(ish) investors would have bought those mortgages, unwound them, resturctured the principle and interest to ensure that the people who held the mortgage could afford them, and sold them at a profit. The average person would have seen their mortgage payment decline significantly, the credit markets would have began to thaw in 2010 or 2011, and we would be seeing significant growth today. Instead of this we have Zombie banks which can't afford to lend people money because their balance sheet is full of worthless paper, they can't sell this worthless paper because no one wants an asset that is going to decline in value, and they can't even write off their poor investment because doing so would force them into bankruptcy. The government spent billions of dollars to make a banking system which was less viable in the long run. |
Isn't that a little bit of a bold statement, don't you think?