Quote:
Originally Posted by Cowperson
Ensuring certain global financial institutions remained in business was necessary - even as you were holding your nose to make it happen.
Whether or not bailing out the automakers was necessary is another thing.
At the time, I used the analogy that financial institutions represented the blood flowing through the global economy whereas GM and Chrysler represented an arm and a leg.
You can live without an arm and a leg but you can't live without blood flowing through your body.
Eventually, lending to financial institutions may in fact turn into a rather sizeable money-maker for the USA government.
Cowperson
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But the government has still created far far too big of a moral hazard for the future.
The only reason the markets have rebounded like they have is that the American Government has essentially said that no one will ever really pay the price for taking stupid risks....
The government could have and should have gotten two things for their money:
1) Total ownership of all of the worst companies assets. (That they then should have sold off in pieces to the companies in the market who didn't take stupid risks.)
2) Total and complete reform of the industry on every front deemed necessary to align the market with reality/main street.
Now that those companies have rebounded on free government money they are not willing to bend even a little on regulation, and without risk being properly priced into the market we are on the EXACT same path to destruction we were before (although governments around the world have taken most of the private losses from this last crisis and converted them into public losses for the long term, further handcuffing a response WHEN next time hits).
The money these companies needed simply did not exist in the market, the government was their only choice.
If roles were reversed I assure you that those companies would have bent uncle sam over a barrel for hundreds of billion in aide....
It has all made a joke of capitalism if you ask me.
Claeren.