Like they did with bailing out the BIG Banks at the beginning of last year? Daylight robbery!
Actually, the bail-outs are surprisingly different from Keynesian bail outs. Keynesian investment would have been more specific to individual markets, as opposed to just giving businesses bundles of bills. It means that it was more inefficient, because they partially used them to add to their bonuses - which was a bit insulting. There is another way they were different. Businesses are obligated to pay back these bail outs. Keynesianism would just have had it translated into debt.
Are you then saying the 1.2-trillion BIG Bank bail-out was not a debt, but for FREE????
Are you then saying the 1.2-trillion BIG Bank bail-out was not a debt, but for FREE????
From the perspective of the Government/taxpayer. By debt, i was referring to the public deficit. The big banks will have to pay back the money.
Whether they should have initated the bail outs is another matter. You could argue that it isn't the place of the state. It's certainly not acceptable that businesses were "too big to fail" - but it could be argued that this necessitated the bail outs (to an exent), in order to secure peoples' savings. Not to mention their jobs, and hence, their livelihoods.
I would have gladly lived on the streets if it meant revolution. I think many agree that depression would have been better then slow suicide.
I'm still very curious about the Government formula by which they had decided which of the BIG banks qualified for the bail-out money, by how much. I'm very cynical about this, as part of the selling tool was that the Banks were going to circulate that money back to the people in the street, but as far as I can see all of that found their way to Wall Street, and the party started all over again! The 1% rich scored through the bail-out and the rest got poorer. And no tough questions were asked and answers demanded in the form of how come the Banks are doing so well within months of ostensibly needing a massive bail-out to SAVE the country???
I'm still very curious about the Government formula by which they had decided which of the BIG banks qualified for the bail-out money, by how much. I'm very cynical about this, as part of the selling tool was that the Banks were going to circulate that money back to the people in the street, but as far as I can see all of that found their way to Wall Street, and the party started all over again! The 1% rich scored through the bail-out and the rest got poorer. And no tough questions were asked and answers demanded in the form of how come the Banks are doing so well within months of ostensibly needing a massive bail-out to SAVE the country???
I remember everyone was bailing out the banks. The German Government secured everyone's savings, which was handy. I think it was Deutsche Bank, which asked for a bail out. Nobody was sure if Merkel was going to do it. A lot of us were hoping she wouldn't.
That sounds a little more transparent than what happened in the United States. But then the Germans are usually very specific in what they do and all of it is open and straight. I'm horribly confused as to how much was given to which Banks in the United States, and at which point those bailed out banks got solvent again, and are they going to repay the money?I remember everyone was bailing out the banks. The German Government secured everyone's savings, which was handy. I think it was Deutsche Bank, which asked for a bail out. Nobody was sure if Merkel was going to do it. A lot of us were hoping she wouldn't.
As far as i'm aware, they've already paid back a bit of it. Probably under pressure from Obama, to make him look good. What's funny is that it didn't work. So far as i can tell, nobody noticed!
:giggle:
With regard to the recent economic problems, Keynes believed that the government has to make up for the decrease in consumer and business economic activity. The idea is that as the economy takes a downturn, business slows down, people get worried and spend less, which causes business to scale back further, people start losing their jobs, the unemployment situation increases the peoples concerns about their own job and they start saving more and spending less, etc etc etc. It is a cycle that can feed on itself. The result if untreated can be a recession or depression. To stop the cycle, the loss in economic activity is replaced by increases in government spending - a stimulus from the government. The spending is supposed to be "targeted and timely" (a phrase we heard a lot last year) so that the result is increased business activity and lower unemployment.
Another aspect is that government spending has a multipleir effect - a dollar spent is worth more than $1. The idea is that the govt gives a dollar to GM as part of a car payment, GM uses that $1 to pay an employee, who spends it on groceries, the grocer uses it to pay an employee, who uses it to pay the day care worker, etc. Some believe the multipler is 1.4, but its a very difficult thing to measure.
For example, "targeted and timely" might mean the following. The government decides to replace its old vehicles, so it sends a huge 2-year order to GM and Chrysler. That keeps the GM & Chrysler assembly lines running, orders to suppliers stay high, workers don't get laid off and keep spending their paycheck on new tv's and vacations which keeps other people working. In return, the government gets new cars, saves on maintenance on the old cars, and can even sell the old cars and make some money.
For another example, the government funds the acceleration of the replacement of damaged bridges. They have to be replaced anyway, and its important infrastructure that will provide transportation benefits for decades.
Where does the money for the stimulus come from? The govt borrows the stimulus money expecting to pay it back when the economy improves and govt revenue increases, and people are in a better position to pay increased taxes.
That's the basic idea, that's not what happened last year.
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