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Originally Posted by mikey_the_redneck
Well for starters, yes the politicians de-regulated the banking sector. Doing that however, does not mean that we automatically bail them out when they fail? Congress people were intimidated into signing the bail-out bill, including threats of "total collapse" and "martial law" behind closed doors. There are c-span youtube videos with several people expressing their concern about this.
Barney Frank? Yeah........the guy had his boyfriend run a gay prositution ring out of a house he owned.
In hindsight of the Iraq war, everyone now knows that the public was flat out lied to about the weapons of mass destruction programs. The fear-mongering lies are what got people behind it. The media helped sell that one.
The Donald Rumsfeld press conference is on youtube also.
The political system itself is corrupt. It's run by banking oligarchs. The people have very little control of the government outside of voting.
"The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can "throw the rascals out" at any election without leading to any profound or extreme shifts in policy."
-Carroll Quigley (Bill Clintons mentor)
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When you run your country's economy on a heavily indebted fiat model you do have to bail out the financial sector and do everything in your power to prop up its teetering wreck, in much the same way if you use a string of visa cards to pay each others bill off you may know its stupid and will eff you in the end but in reality not paying off the next card in line will cause your whole economy to crash and burn.
So yes, the consequense of not bailing out the banks in '08 would have been an utter collapse of the US economy, mass (as in 25% or more) unemployment civil unrest etc. Had the financial sector collapsed the immediate consequense would have been the Feds, the states and the municipalities losing any ability to borrow money, pretty much all public services, schools police fire would have ground to a halt, soldiers would have gone unpaid, pensioners would have starved.
The US's level of deficit finance means that any tightening of the money supply will mean a catalysmic level of fiscal belt tightening in about a month.