Tuesday, July 28, 2009

Bailouts



Despair.com (HT Peter Klein)

2 comments:

thinking said...

Too funny.

But as odious as the bailouts were, and as poorly managed as they initially were by the Bush administration, there is no doubt that without the bailouts the financial system would have collapsed.

Look at what happened when Lehman Brothers was allowed to fail. Now imagine if Merrill Lynch, Bear Sterns, Wachovia, WAMU, perhaps B of A and Citi, were all allowed to go under. Then we really would have had a replay of the Great Depression, when so many banks were allowed to fail.

Add to that the otherwise collapse of GM and Chrysler.

I compare the bailout to emergency medical measures; they often are not perfect, have some nasty side effects, including a lot of pain, but are far better than nothing.

To extend that analogy further: consider major surgery. The body is deliberately exposed to a major trauma, the patient is anesthetized with a controlled poison, there is much pain afterwards...yet when necessary, it can save a life.

Clint D said...

"...there is no doubt that without the bailouts the financial system would have collapsed."

I don't believe there is sufficient evidence for this statement. Not in the slightest.

That goes especially for BoA who I believe took the money for convenience sake and bottom line, rather than for solubility. This is the case for several of these institutions.

We would have likely had less outlay had they gone under and the FDIC taken over than with the bailout funds we produced.