Quote:
Originally Posted by jyl
Is it money well-spent? Well, we saw what damage the Lehman collapse did to the credit markets, and we've now seen what damage the credit markets are doing to the real economy. C is many times larger than Lehman, so you can probably guess at the damage if C collapses. We're talking that worlds' largest bank, by assets (this might be outdated info, but anyway it is damn big).
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If the government would
not have bailed out Bear Stearns back in March, all the "house-of-cards" banks and brokerage firms would have toppled.
The government would have had to pay a few trillion in FDIC insurance. (People with non-FDIC funds would have lost chunks of money. The FDIC payouts would have created severe inflation.)
It would have been a horrible summer.
BUT, if the government had let
all the "bad actors" in the economy fail when the market was ready to expel them (in March, with Bear's collapse), we would now be beginning to enter a real recovery.
Instead, the government has keep (and with the Citi bailout, is "keeping") all the "zombie" financial companies "alive."
The economy needs to "vomit" the poison (the bad debt and bankrupt businesses) out of the system in order to have a recovery. The government is keeping the poison in the economy creating a long-term debilitating situation that will take decades to recover from.
The government's actions is driving us into another Great Depression.