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Old February 10th, 2009, 06:28 PM   #1
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Should the banks get bailed out?

The banks made bad investments with the unbridled lending to the sub-prime market and other bad investments. Then convinced the government that the economy would collapse if they didn't get bailed out.

Should they have gotten bailed out?

Even after getting bailed out they waste some of the money.

If u say they should have gotten bailed out should they get even more money after what we have seen them do with the original money?
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Old February 10th, 2009, 06:56 PM   #2
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Well...we already bailed them out. It's a little late for anything else. It also didn't do as much as they had hoped, except buy us a little time. I believe that current thought is going toward supporting mortgages to stop the foreclosures and bring back some stability. There was also an interesting idea to help some private money buy the bad securities and hold them for awhile until they regained value. Lots of ideas out there.

The banks should have been bailed out though. They didn't deserve it, but they needed it. If we had let them all fail, then the economy would have failed. That's just a fact. Most major companies rely on a line of credit to handle large spikes in costs. This includes salaries. A lot of companies would have had emergencies with solvency and employees would have seen weeks of delay in receiving their paychecks (if not more). I dare you to calm that panic.

They also weren't truly bailed out. We just bought stock in them to give them more capital. I can't remember how much was common and how much was preferred, but it was a fairly safe investment.. They shouldn't go bankrupt, so we'll just sell the stock over time once they recover. We are also in a position to better regulate the money. Wasteful activities will really be reeled in in the future (I think). Obama seemed genuinely angry about it and I get the feeling he'll see it through.
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Old February 10th, 2009, 07:54 PM   #3
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Quote:
Originally Posted by The Parakeet View Post
Well...we already bailed them out. It's a little late for anything else. It also didn't do as much as they had hoped, except buy us a little time. I believe that current thought is going toward supporting mortgages to stop the foreclosures and bring back some stability. There was also an interesting idea to help some private money buy the bad securities and hold them for awhile until they regained value. Lots of ideas out there.

The banks should have been bailed out though. They didn't deserve it, but they needed it. If we had let them all fail, then the economy would have failed. That's just a fact. Most major companies rely on a line of credit to handle large spikes in costs. This includes salaries. A lot of companies would have had emergencies with solvency and employees would have seen weeks of delay in receiving their paychecks (if not more). I dare you to calm that panic.

They also weren't truly bailed out. We just bought stock in them to give them more capital. I can't remember how much was common and how much was preferred, but it was a fairly safe investment.. They shouldn't go bankrupt, so we'll just sell the stock over time once they recover. We are also in a position to better regulate the money. Wasteful activities will really be reeled in in the future (I think). Obama seemed genuinely angry about it and I get the feeling he'll see it through.
Yeah the government bought stock from that that they knew was under valued. the stocks are only worth like 10% of what the government paid for them. So they lied to the government. They new the prices of the stocks. Why do these CEOs still have there jobs??? In France one bank got bailed out and they fired the CEOs and replaced them. Why not do that here?
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Old February 10th, 2009, 08:13 PM   #4
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The stock wasn't overvalued. Again...I'm not sure where you are getting that idea. Stock is worth what the market will pay for it. It has no true value. Please explain this idea better.

There are a few reasons that the CEOs weren't fired. One is that only a few were really bad. The rest were just flowing an investment scheme that made them huge short-term profits. They were technically doing what was best for the bank. The crisis wasn't just a bunch of CEOs getting rich. It had tons of inputs.
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Old February 11th, 2009, 03:04 AM   #5
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NO! the way banks work is disgraceful. They only need $1000 to be able to loan out $999 and then if someone takes that $999 loan they can loan out another $998 and so on. These aren't the exact figures but it gives you a pretty clear image of why banks shouldn't be bailed out. Also no one should lose their houses either if the banks go bankrupt or need money. The American government conveniantly mis places trillions of dollars every year. I wonder where this goes...........just goes to show some is wrong with the current economy structure.
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Old February 11th, 2009, 02:50 PM   #6
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I don't believe they deserve it, the Goverment should use that money for other things, which are much more needed than bailing banks and car companies, it was the companies that got themselves in the mess in the first place, they should be able to get themselves out, or fold. Just my opinon though.
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Old February 11th, 2009, 04:15 PM   #7
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Rice Pudding - Yeah. That how most of the economists feel. It's just not practical to let the whole sector fail though. Sorta a moment of paying the Piper and biting your tongue. The collateral damage wouldn't be worth it. The best bet was to give them enough to let them stabilize and reform. The reform is the most important part and my cynical mind doesn't have a lot of faith in the car companies.

Websuperstar - That's not right. We have a 10% reserve rate. If I deposit $1,000 then they can loan out $900. When that person spends it/deposits it somewhere else that bank can loan out $810. So on and so forth.

That's a basic principal of economics and really has absolutely nothing to do with the crisis. The crisis was more about bad trades, bad loans, and poor regulation for credit default swaps. The government also lets them do that. If we wanted, we could make them do a 100% reserve. That would mean that no one got loans and growth would screech to a halt.
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